The International Monetary Fund (IMF) has fiercely criticised the bailout deal offered to Greece by the Eurozone, revealing that the Eurogroup of finance ministers had ignored its advice when negotiating with Greece over the weekend.
In a communique released last night, the IMF said Greece’s public debt was now “highly unsustainable” before concluding: “Greece’s debt can now only be made sustainable through debt relief measures that go far beyond what Europe has been willing to consider so far.”
It now appears that the deal, rather than seeking to help the Greek economy, was designed principally to teach Greece a lesson and remove Syriza from power.
Today the Greek parliament votes on whether to accept the austerity deal that it was bullied into over the weekend during negotiations dominated by Germany.
Certainly, the IMF bombshell is likely to stiffen the resolve of the those Syriza MPs such as Papas Lapavitsas, an economics Professor from the School of African and Asian Studies (SOAS) in London, who have long argued that a Greek exit from the euro is the only realistic choice open to revive the Greek economy.
Regardless of the immediate outcome of the vote, the whole drama has weakened transparency and democracy in Europe. The euro project is now clearly seen as a failing project and its eventual break-up appears inevitable to many. The only questions remains when and how exactly it will occur.
What should investors do?
Investors can be sure of one thing: there is going to be increased market volatility going forward.
Every Investor has long argued that with the mispricing in the financial markets and stock market bubbles in China and the US, not to mention increasing instability in Europe, investors should be wary about taking risks. In this video interview with eminent economist Professor Steve Keen he advised investors to adopt hedging strategies.
Economist John Williams’, who publishes the ShadowStats newsletter analysing the manipulation of official US economic statistics, commented yesterday: “Gold Remains the Primary Hedge. Despite mounting global instabilities, gold prices remain depressed. Whether hit by selling to meet the liquidity needs of those in heavily stressed stock markets, or pummeled by central banks trying to discourage investment in gold by those who are not overly impressed by the recent behavior of those same central banks, physical gold and silver remain the best hedges against the financial instabilities ahead.”
The writer holds both physical gold and silver.