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Last night at 07:00 o’clock at night the online edition of the German Spiegel published information that Greece is preparing to leave the Euro Zone and bring back its national currency. Citing an anonymous source from the German government the article said that Finance Minister Wolfgang Schäuble wants to prevent this at any cost. For this reason, right now an emergency meeting in Luxembourg is held with the participation of the finance ministers of Germany, France and Italy with their colleagues from Greece and Portugal under the chairmanship of the President of Eurogroup Jean-Claude Juncker. 

At 08:00 o’clock at night the Greek finance ministry officially denied the information published by Spiegel, and called it to be a "lightweight, provocative and serving speculative interests." For Reuters Finance Deputy Minister Filippos Sahinidis once again said that Greece is not prepared to leave the Euro Zone or to restructure its debt. Originally the office of Jean-Claude Juncker denied holding the emergency meeting of the finance ministers. Later, however, sources confirmed for Reuters that such a meeting is taking place in Brussels. 

The complete secrecy surrounding the midnight financial meeting and the delay, which officially confirmed it, however, left room for speculation and doubts. The German Government stated that the meeting is not an emergency one, but is in the context of regular ongoing meetings of the Euro Zone finance ministers participating in G20. These meetings are held under the patronage of the President of Eurogroup Jean-Claude Juncker. This time invited were also the Finance Minister of Portugal, to discuss the conditions for financial assistance and his colleague from Greece, with whom to discuss the country’s current economic situation. The announcement of the German Government also claims that the meeting was strictly confidential and every finance minister was entitled to bring only one assistant. German Finance Minister Wolfgang Schäuble was accompanied by his deputy Jörg D. Asmussen. 

Due to the strict confidentiality of the meeting any information about the content of conversations may be very misleading and deceptive. One thing is certain, however - the ministers who manage the financial future of Europe have not gathered on Friday night to talk about the weather. 

But let us go back to the status of the Greek economy, which right now looks something like this. The budget deficit last year was 10.5 percent of GDP and the current 2011 will keep the same framework. Government debt is estimated at around 327 billion Euros and 142.8 percent of GDP. In 2011 the government bonds worth 35.3 billion euros are expiring and the aid to Greece from the European Union and the International Monetary Fund is 40 billion Euros. Together with the issuance of short-term notes worth 18-20 billion Euros the country will easily meet its fiscal needs. The problem comes in 2012, when Greece will have to pay back its creditors 40.5 billion Euros, and will receive only 24 billion Euros from the European Union and from the International Monetary Fund. To this we should added about 17 billion Euros budget deficit. Well, the 2012 bill clearly does not come out right. 

For months the Greek financial circles are discussing the various options before the country's economy and generally they are two - either the country should leave the Euro Zone and return it’s the Drachma, having previously been dramatically devalued, or restructure its debt. Both options have their supporters and opponents. With the Drachma Greeks will sink in poverty and political decisions will be extremely negative for the other European countries. However, it will make Greek goods very competitive, it will have a positive impact on exports, tourism, and the real estate market. Restructuring the debt seems to be the less painful option. Greece owes money to various institutions, it has borrowed them under different conditions, with different interest rates and different dates of maturity. A cool reflection and restructuring of the entire package of obligations to creditors is not easy, but it is also not impossible. 

The logical question is why the government of George Papandreou does not proceed to the inevitable restructuring of the debt, has only one logical answer - because Greek banks are not ready yet. To withstand a moderate debt cut of approximately 30 percent, local financial institutions must be consolidated and broadened. The Bank of Greece, the PASOK government, the supervisory triad - the European Commission, European Central Bank and the International Monetary Fund and the financial markets, all agree with this. 

Citing a reliable source Banker's Review magazine claims that the biggest nightmare of the Governor of the Central Bank of Greece George Provopoulos is from where to find 6-8 billion Euros every day in order to cover the holes of the three Greek banks. This is also his strongest argument to the bank circles, which for months have been called upon for greater cooperation and merging of institutions. According to the source a friendly 30-percent debt cut, which increasingly seems to be an extremely optimistic option, and international analysts are already talking about 60-percent cuts, and in such a relatively favorable scenario, one of the Greek banks, which is most likely to merge, will lose 50 or more percent of its property.