Greek saga will continue beyond deal

For yet another day markets are once again drifting between being entranced and frustrated with Greece, but even if the positive noises we have heard come to fruition (agreement on austerity and the ECB sharing some of the pain), it’s difficult to see Greece moving that far away from the headlines.

There is some interest this morning in an FT Deutschland story suggesting that only EUR 30bln of the EUR 130bln second aid package will be released, with the remainder subject to a parliamentary vote in Germany. This is partly a story and partly not. Remember that the EU/IMF has always paid aid to Greece in instalments. So far, six have been paid, with the largest of these being the initial EUR 20bln back in May ‘10. As such, EUR 30bln would be the largest single payment to date, with subsequent tranches dependent on Greece meeting the austerity and other measures set out by the EU and the IMF.

But the fact that Germany wants to impose ever tighter controls on the remaining disbursement will once again make for an even more painful process of securing future funding by Greece. The end of November’s disbursement (EUR 8bln) was delayed for weeks; this one looks to be going right to the wire and, if Germany’s position proves to be as suggested today by FT Deutschland, future disbursements could be even more protracted affairs. If agreement is reached today (a big ‘if’ as usual) and the stories on the effective ECB write-down prove to be true, then no doubt markets will breathe a collective sigh of relief. But don’t expect that to be the end of Greece's odyssey, as the country continues to live hand to mouth from the EU/IMF bowl.