If earlier in the third part of the package of financial aid to Greece allocation of 86 billion euro was planned, they now may need a lower amount. It is this statement was made in the walls of the ECB on the basis of a new series of stress tests of Greek banks. As part of the package, 25 billion euro was supposed to be sent to recapitalize banks, but according to the ECB, it will take a little more than 14 billion. However, despite all this support, the future of Greece is still very vague.
The newly elected government is trying to push through parliament the next package of laws providing for, inter alia, the introduction of property tax and penalties for early retirement. Athens is once again at a crossroads - to satisfy the claims of creditors it is necessary to go to one more round of unpopular measures, which threaten an even greater increase in strength in the economy. For example, the growth of arrears on consumer loans continues to increase with each passing month.
A key problem is the fact that one in four Greeks is unemployed. Moreover, the total mass of the unemployed in the second quarter only 8.6% were able to find a job again. Even in the poorest European countries, such as Bulgaria and Macedonia (not included in the EU), the situation with unemployment is much better. With the "youth" unemployment (up to 25 years), the situation is even worse. If the euro area figure is 22%, in Greece, it is almost 50%, and no improvement is expected in the near future.
Consequently, the ideal conditions were created for the transition from a state of cyclical unemployment into structural. The fact is that when unemployment reaches such a high level as it is now in Greece, and stays on it for quite a while starts in a certain way to self-sustain, and reproduce itself. In economics, this effect is called hysteresis. Even if the causes of the crisis are over, unemployment does not return to its previous level.
People, who are unemployed for a long time, are more reluctant to take the job. Trade unions are, as a rule in such a situation, focused on protecting the rights of workers, and the government simply does not have resources for large-scale retraining programs. Some significant economic growth in the current circumstances is simply not possible, and the level of social tension steadily increased. It is in this situation that Greece find itself in.
After the publication of weak data on the US GDP, the Eurodollar went into a correction. However, during this week there will be sufficient news capable of returning the pair to a decline. First, we should pay attention to the US trade balance and the ADP forecast on employment (Wednesday), and on Friday we have one of the most important indicators of the month - the number of jobs.
RoboForex Analytical Department
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