Iran Will Be Getting a Fresh Bail-Out Deal, While Greece Has Promised Not To Develop Nuclear Weapons


After fevered all-night talks, sleep-deprived negotiators have proudly announced that Iran will be getting a fresh bail-out deal, while Greece has promised not to develop nuclear weapons... Actually, of course, President Obama has finally managed to achieve his Iran nuclear deal, which will now move to Congress for what will likely be a furious debate. The prospects of access to a previously offlimits emerging market of 77 million people is tantalizing for exporters in a demand-starved world; yet other countries in the Middle East are not preparing new trade missions, but rather appear to be girding their loins for battle; and oil prices actually rose yesterday rather than falling, suggesting a deal had already been priced in (no surprise given the constant flow of leaks from them: one would hope the new nuclear inspection regime is more water-tight).

Meanwhile, although Greece is not going nuclear in that sense, the recent bail-out is already coming under massive bombardment. It's still not clear if PM Tsipras can get the deal through parliament over the heads of opposition from a large slice of his own party; a 24-hour general strike is already being called by civil servants, perhaps a portent of civil unrest to come even if it does pass; and the Greek economy minister has just stated that the privatizations that could account for EUR50bn "obviously do not exist". Yet it's the IMF that has just dropped the largest bombshell by stating that Greece's debt either needs to see "deep, upfront haircuts", or the entire debt maturity must be extended by 30-years. Indeed, the Fund makes clear that despite the insistence of Europe's Dr. Strangeloves, its rules do not allow it to take part in a bailout if a country's debt is considered unsustainable, so if there is no major debt relief, it may walk away from this whole process. EUR has yet to react to that news today, but the fuse has been lit...

Source : FX-Primus

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