By Hugo Dixon
Hugo Dixon is Editor-at-Large, Reuters News. The opinions expressed are his own.
The Greek government has sent a reform package to its EU and International Monetary Fund creditors, hoping it will unlock desperately needed funds to stave off bankruptcy.
Greek Prime Minister Alexis Tsipras meets Angela Merkel in Berlin late today.
The strategy in Athens seems to be to seek mercy from EU leaders, going over the heads of euro zone finance ministers and the European Central Bank and IMF, hoping that they will see the broad political cost of a Greek collapse rather than focus on the nitty gritty of funding and required economic reforms.
That doesn’t look like a winning strategy.
A possible bank run is Greece’s Achilles’ heel.
The country probably won’t be forced out of the euro. But there is a scenario where this could happen. This involves Syriza, the radical-left party, winning the upcoming election and then running out of time before it can perform the policy U-turn necessary to keep its creditors on side. Depositors might then panic.
Euro zone service sector PMI readings for December are unlikely to alter European Central Bank thinking about taking the ultimate policy leap and commencing a quantitative easing government bond-buying programme, possibly at its Jan. 22 meeting.
German inflation figures for December will presage the euro zone number on Wednesday, together offering one of the final pieces of the jigsaw for the European Central Bank before its late January policy meeting at which it could commence a quantitative easing government bond-buying programme.