Showing the complete and utter grasp of managing macroeconomic stability that has made the Eurozone the financial and political paragon of strength that it is today, the Eurogroup has scheduled a discussion about the Greek loan programme for its meeting on October 14-15, coinciding with the projected hard limit for the U.S. debt ceiling. The "ceiling" predicted to be hit today will cause a freeze in non-essential payments, but the full ceiling would put a stop to social security, Medicare and military pay.
The Greek government has until October 7, to present a budget aimed at meeting the milestones set for the release of the next tranche of EUR1bn bailout money. Troika inspectors left Greece on Sunday, failing to agree with Greek governmental plans to arrive a EUR2.8bn primary surplus in 2014. It is predicted that this year's surplus will not break EUR100m. Unemployment is expected to remain above 25 percent in 2014.
Eurozone confidence will not be aided by the continuing discussions in Germany as Angela Merkel seeks to form a working coalition government. Her Christian Democratic Union party is expected to begin talks with rival Social Democrats later this week, but there is a possibility of months of negotiations.
The timing of the Eurogroup meeting is good news for those reminiscent for the halcyon days of September 2011 when eurozone instability, a U.S. debt ceiling stand off and Middle Eastern instability helped to break the VIX above 40 and batter the S&P.
The common currency may find some support in EUR/USD by virtue of being the least ugly dog of the pair, but gains on either side will be dependent on the speed of a resolution of the debt ceiling stand-off. The US Senate will convene today, when it is expected that the Democrat-controlled chamber will summarily kill a bill from the Republican-led House that would tie a raise in the U.S. debt ceiling to spending cuts and a delay in the implementation of the Affordable Care Act.
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