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It's a good old fashion standoff, and this time it's on the world stage. Germany and the European Central Bank (ECB) want Greece to tighten further. Specifically they want Greece to add 1% to 2% to its value-added tax and cut wages further in exchange for financial assistance.
Greece is balking. They want to postpone any decision on further measures until mid March when officials from the European Union, ECB and the International Monetary Fund complete their inspection of Greece's deficit cutting plans.
Meanwhile back in Germany, there is popular opposition to helping Greece. A recent poll indicates that 67% of Germans oppose any aid to Greece. Not only do they oppose helping Greece, the poll indicates that they want Greece thrown out of the eurozone.
European finance ministers are meeting Monday. They will consider whether Greece must reduce its deficit from 12.7% to 8.7% this year.
Greece maintains that deficit cutting measures already taken will meet the deficit target. They imposed a fuel tax increase and an extra 1% cut in public sector pay.
Analysts believe that the these cuts will not be enough, especially when Greece's economy contracted by 2% last year.
French and German officials are willing to wait until March. The ECB maintains a "no bail out" clause must be adhered to.
However, ECB president Jean Claude Trichet pledged: "to take determined and coordinated action, if needed, to safeguard financial stability in the euro area."
If you can make sense of the myriad of cross currents at play in this crisis, you deserve an Olympic medal. It seems like organized chaos at the moment. It could be bumpy ride for the markets again this week.
Do you believe that Greece should be bailed out?
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