The Greek budget gap is about $26 billion, according to Der Spiegel (via MarketWatch).
That budget gap, much larger than previously estimated, would have to be eliminated for Greece to get needed aid packages from the EU, ECB, and IMF.
The problem raises ,one again, what the tipping point will be for Greece’s neighbor, particularly German. Angela Merkel has already made decisions to fund bailouts which are extremely unpopular with most of the nation’s voters. She has to stand for reelection next year.
The news also raises the issue, once again, of whether the EU will reject the financial needs of Greece and allow it to fall into default, and out of the alliance altogether. It is estimated that, if this were to happen, Greece would go into a multiyear depression , worse than the one it is already in. GDP contraction is estimated to be 6% or more now, and has dropped five years in a row.
Douglas A. McIntyre
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