Greek Government Warns of Secession without Next Loan Tranche

In an exceptionally frank comment, highlighting the direness of the situation, a spokesperson for the Greek government announced yesterday that should Greece fail to get approval for the second bailout loan that Greece would leave the Eurozone. The government desperately needs the €130 billion tranche emergency loan to satisfy its obligations that are coming due in March, but many firmly believe they are running out of time.

Officials of the troika which are overseeing the provisions of the emergency fund will be meeting later this month to discuss the release of the next payment. Analysts believe that the unusual step was made in an attempt to hammer home to Greek voters the urgency of the situation as well as to send a message to the powers-that-be that the Greek government is playing hardball. A recent survey showed that while many Greek voters disagree with the austerity measures and reforms that are being enacted, the majority also don’t want to secede from the Eurozone.

Public officials from the Eurozone have been careful not to even whisper a suggestion of a Greek default, and it is only recently that some officials have begun to publicly ponder the possibility. Many analysts warn that it is a Greek default could drag the Eurozone further into a crisis.

Likewise, the Greek government is cautioning that a return to the Greek Drachma must be avoided as it would be “hell.” And with the government hinting that more austerity measures could be needed as a result of recent fiscal slippages, it’s certain that the unpopular reform measures will have Greek voters even more angry. But as the Greek government spokesperson said, “the situation will be much worse.”

The Greek comments put a quick end to the 4-day rally in the European equity markets; theDAX is down 0.32% while the CAC-40 is 0.24% lower. The FTSE is 0.30% higher however, deriving some benefit from upbeat economic news. The Euro is also down against the U.S. Dollar, trading at 1.3035 while sentiment on the OpenBook trading platform has become bullish.