After reaching a six week high gold prices are down slightly on expected corrective pullback. Gold last reported a.m. is $1212.70 down $6.70 and silver is $16.87 down 29 cents.
Greece is working two fronts as Greek Finance Minister Yanis Varoufakis is in Washington meeting with senior administration officials and Prime Minister Tsipras will be visiting Vladimir Putin on Wednesday. Greece is hoping to draw support, if only for show, as the EU demands the country make its scheduled debt payments. Varoufakis said he wants to assure Washington and the EU that Greece intends on meeting its debt obligations to all creditors.
Greece believes the U.S. will be more sympathetic to their fiscal needs than EU members. Greeks have also remained critical of an EU dominated by the Germans, especially while Germany is demanding that Greece pay its debt. Washington has been working behind the scenes to calm tensions as a Greek exit from the EU would create chaos across global markets. The surprise trip to Washington was reportedly initiated by the IMF after Greek ministers began suggesting the government would prefer to pay pensions and salaries in place of the IMF loan.
Failure to meet bondholder obligations could spark a dangerous chain reaction for a country saddled with €320bn in debt – the highest debt-to-GDP ratio in Europe. As such, Lagarde was quick to say she welcomed the news that Athens would honor the loan repayment.
Reports indicated the IMF chief had also pressed Varoufakis to agree to pension cuts and raise VAT. Both are anathema to a government that has refused outright to adopt any more “recessionary” measures.
On the Russian front, Kommersant Business Daily reports that Russia may offer Greece new loans and discounts on gas deliveries in exchange for Greek assets. The primary asset Russia is looking for is a Greek veto that can be used to stop NATO aggression against Russia. Tsipras knows he doesn’t have real bargaining power outside of selling a vote. Greece finding itself in the position of the unwanted beggar, understands it’s going to be a long difficult road ahead.
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