Troika to accuse Greeks of building secret survival fund [The Slog]

Alarming French debt data shift eurozone balance of power back to Berlin

As the true extent of Greek ally France’s short-term debt problemscame to light, French sources today reported that the Troika will produce “a damning report” on Greek austerity and debt repayment progress….alleging in particular that Athens is building a ‘survival fund’ to give it greater bargaining power. This muddies the waters still further in relation to the European tour of Greek Prime Minister Antonis Samaras next week:  Berlin now looks to be in a stronger position than previously.

Events make fools of us all. Last Saturday, The Slog nailed its colours to the mast of an inevitable German exit from the eurozone. I still think the odds are very much on that outcome, but one or two developments in the last 36 hours have moved things back into the realms of possibility for a Merkeschäuble triumph against those odds. For the risk investor, these are the most significant ones helping Germany:

1. As The Slog posted this morning, the ECB seems to have theoretically deeper pockets – and France much bigger debts – than many had previously assumed. These facts mean, respectively, that Athens is less able to play the damage limitation card, while France is a less valuable ally than Samaras had hoped. (It has been reported today that the Greek PM already has the support of Francois Hollande for his desire to relax the pace of German austerity and debt repayment).

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