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The Greek crisis has commanded a disproportionate amount of the headlines over the past few months.  Greece is looking to secure another round of bailouts, while Germany, France, and the rest of the Eurozone members are negotiating how to both stabilize Greece’s economy and prevent any spillover into their own economies.  Meanwhile, investors have been carefully analyzing every development and are impatiently waiting for any temporary resolution.  The attached timeline reviews the key past and upcoming events that will provide some clarity on the Greek crisis.

We believe that the following events will determine the next disbursement of Greek aid that will allow the country to avoid default.

• On Oct 4, finance ministers from the European Union (EU) postponed the release of the next installment of aid to Greece. Greece Finance Minister Evangelos Venizelos said the country has enough cash to operate until mid-November. With cash needs covered until then, the Greek Parliament has time to pass more austerity measures required by the bailout plan.
• Finland secured the right to have collateral backing its contribution to Greek aid. The collateral program found no other takers but Finland.
• The Oct 4 meeting ended with a new sense of urgency among ministers that more has to be done to ring-fence the Greek debt problems to prevent contagion. A plan for concerted bank recapitalizations was discussed, but specific deals were not provided.
• On Oct 9, Germany and France will meet in Berlin to discuss banks’ finances. Germany has cited the need to prepare for a Greek default that investors see as a sure thing. France, whose banks have the most to lose, is unwilling to gamble on letting Greece go.
• On Oct 14-15, finance ministers from the Group of 20 (G20) nations will meet. Solutions to the Greek crisis should be discussed, but decisions for implementation (if any) should be considered during the November 3-4 meeting of G20 leaders.
• On Oct 17-18, EU council leaders are expected to meet to finalize the expansion of the European Financial Stability Fund (EFSF) to 440 billion euros.
• On Oct 24, inspectors from the EU and IMF are expected to present their audit reports on Greece finances and recommend the disbursement of aid to Greece, according to the Luxembourg Prime Minister.
• Greece is working with inspectors from the EU and IMF in coming up with more austerity measures, such as the reduction of the minimum wage of government employees. Depending on the timing and pace at which Greece comes up with more reform plans to meet demands, disbursement for aid can occur between Oct 17 and late November. We expect aid to be disbursed before December, during which 10 billion euros of bond payments are due.

Conclusion: The passage of austerity measures, such as the unpopular property tax increase, demonstrates Greece’s commitment to reduce its budget deficit. We believe that the next installment of aid will be given to Greece. Financial markets should start to normalize after the next aid package is granted and continues to do so in November when a longer term plan is expected from the EU.

The following link points to a pdf file that features a complete timeline on the past and upcoming events in the Greek debt crisis:

Key upcoming events in resolving Greece debt problems

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