Unfinished business in Greece

by David Schwartz

Financial Times
September 14, 2012

The Federal Reserve and German Constitutional Court generated last week’s main headlines. They also caused some investors to overlook fresh developments in another important story.

When it comes to Greece, the gap between rhetoric and reality is widening. Statements from European leaders confirm their desire to keep Greece in the Euro but a steady flow of information from other sources suggests a Greek exit is approaching.

One important straw in the wind is a change in sentiment among European voters. The number supporting another Greece bailout continues to shrink. The focus of their anger is also shifting. Voters fumed in the past that Greece did not deserve further help. But a growing number now worry about negative effects upon their own financial health.

For its part in this saga, Greece failed, yet again, to implement a series of promised spending cuts a few days ago.

Here is another revealing incident that illustrates the intractability of Greece’s problems. The island of Hydra, not far from Athens, was recently visited by a group of tax officials in response to the low level of tax receipts being submitted by local merchants.

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