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The Greek bailout ballet

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  • Greece is moving towards what many see as the inevitable restructuring (not repudiation) of its debt. German Chancellor Merkel said it would take some months to negotiate, and over that period it is critical that Greek banks remain liquid.
  • The European Central Bank has to agree to extend the emergency lending assistance to Greek banks today. Meanwhile the Financial Times reports that the ECB is not in favour of allowing the Greek government to issue more Treasury Bills to finance the government over the restructuring negotiation period.
  • Service sector sentiment in the Euro area should show reasonable levels of economic activity - the manufacturing data showed modest economic expansion. The Chinese service sector data caused one or two concerns overnight, but this seems an overreaction given the unreliability of sentiment statistics.
  • The US non-manufacturing Ism is forecast to slow to 56.0 - expansion, without accelerating economic expansion. An economy cannot continue accelerating, of course, and maintaining momentum would allow the US economy to grow above trend this year.