Eurogroup Meetings

Monday, Finance ministers of the Euro Zone met in Brussels for discussion on the major Euro Zone issues.

Possible subjects were the Spanish bailout, Greece finances, and the new bailout fund.

Spain’s Bailout

There has been talk for months about a Spanish Bailout, today we received some clarity from the German Finance Minister on this issue.

German Finance Minister Wolfgang Schaeuble said Spain clarified they wanted no assistance. “Spain needs no aid program. Spain is doing everything necessary, in fiscal policy, in structural reforms,” he said.

I see that as good news for Spain.

Recently, the diagnosis of a hurting economies is usually something like “you need a bailout or quantitative easing“. Is this really effective though?

Throwing money at a problem doesn’t solve the problem, it just makes the person who has the problem rich.

For an economy to perform ideally it has to generate money independent of government. Just a thought but, maybe the reason for a poor economy is that the government is too involved in the economic front in the first place. Government’s role is to protect not provide.

Greece Negotiations

The chairman of the Eurogroup, Jean-Claude Juncker, said that developments with Greece were unlikely until the troika is done with a report on the debt situation of Athens. The troika is a term for the three most powerful organizations over Greece’s financial outlook. The groups are the European Commission, the European Central Bank, and the International Monetary Fund.

“I don’t think that we will have any major decisions on Greece,” said the Eurogroup Chairman. When he was asked about a soon coming decision on Greece, he said: “Hope never dies.”
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It appears there were no major conclusions made today in Brussels but, the near future, and certainly the long term future, is full of uncertainty in the Euro Zone.

Short term it’s possible to see the Euro continue up into the low 1.30’s and hang out there. I also think Risk Aversion can come into play as many in the Euro Zone have hopes that good decisions will be made. Long term, I think the Euro could be very bearish.

Draghi speaks tomorrow. He is due to testify in Brussels. That will be at 3:30am EST.

For more economic news, check out Forex Factory’s calender here.

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    To enhance economic policy coordination among member states sharing the single currency.