Who’s tired of the ”Markets up on Greece, markets down on Greece” headlines of the past few weeks? (I am.)
Today it’s an up day, with world stocks hitting a six-month peak on hopes that Greece will secure a second bailout package next week (finally, really).
But beneath the optimism lies a dire Greek economic and fiscal situation.
The Greek economy slumped 7 percent in the last quarter of 2011, with the rate of contraction since Q4 2008 reaching a whopping 16 percent in cumulative, real GDP terms.
“The fiscal adjustment, which started off with an impressive deficit reduction of more than 5% of GDP in 2010 stalled in 2011… despite a significant fiscal effort.