Greece Remains On A Hope And A Prayer – Gold Goliath

Posted on :Apr 22, 2015

Gold prices ended Wednesday at a three week low against heavy sell-off as the U.S. dollar index rebounded. Gold last reported is $1187.70 and silver is $15.81.

U.S. economic data continues showing signs that we remain in a period of stagflation as “good” economic news has a shelf life of about 24 hours before it does a 180 turning south.

Wall Street Journal reporter Jon Hilsenrath said Wednesday the Federal Reserve’s timing on an interest rate hike depends on two things: the value of the U.S. dollar and global economic growth prospects. Boston Fed official Rosengren made the same remarks today. The FOMC meets next week to discuss U.S. monetary policy. The (U.S. dollar index) is a key “outside market” and has been important for most markets on a daily trading basis for years.

Bloomberg reports, Greece and its creditors are hoping to narrow their differences as officials on both sides recognize that the best chance for success is an accord that leaves them all somewhat unsatisfied, Finance Minister Yanis Varoufakis said.

“The convergence is absolutely clear,” Varoufakis told reporters in Athens late on Tuesday. Both sides “have invested a huge amount in achieving an agreement, and neither they nor we will let the opportunity slip to arrive at an agreement that’s clearly to the benefit of everyone.”

Greece has been struggling to make progress toward releasing financial aid since striking a deal to extend its bailout program in February. The anti-austerity coalition government has repeatedly expressed confidence that a deal to free bailout disbursements was imminent, only for that to be refuted by euro-area officials seeking concrete steps.

German Finance Ministry spokesman Martin Jaeger said Wednesday that his government wants Greece to explain the delay in providing a comprehensive list of measures to improve the functioning of its economy. He said Germany has “very limited expectations” for Friday’s meeting of European Union finance chiefs in Latvia.

The standoff has left Greek banks depending on European Central Bank emergency liquidity after losing more than 15 percent of their deposit base. The ECB on Wednesday raised the ceiling for Emergency Liquidity Assistance keeping Greek banks afloat by about 1.5 billion euros ($1.6 billion) to 75.5 billion euros, according to two people familiar with the Governing Council’s decision.

Greek bonds rose on Wednesday, pushing the three-year yield down 188 basis points, or 1.88 percentage point, to 27.7 percent at 3:07 p.m. in Athens. The Athens Stock Exchange rose 1.3 percent.

‘Catastrophic’ for All

While euro-area officials have been pushing back expectations of when a deal might be reached, they have offered Greece some cautious encouragement this week.

“In recent days, there has been tangible progress in the quality of the discussions,” ECB Executive Board member Benoit Coeure said in an interview with the Athens-based Kathimerini newspaper. “Significant differences on substance remain and substantial further work is needed.”

A failure to reach an accord would be “catastrophic,” Varoufakis said.

A move by Greek Prime Minister Alexis Tsipras on Monday to order local governments to shift funds to the central bank revealed how tight the government’s margin for maneuver is. The stop-gap measure may give him just enough breathing space to pay salaries, pensions and a payment to the International Monetary Fund but it won’t forestall the inevitable.

Greece’s economy in its current condition, is unsustainable. Without complete overhaul, Greece will remain in the position of beggar.

Debt would be a wonderful thing if it didn’t demand repayment.

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