The domino of the Greek debt is jeopardizing all Europe

After receiving pressure from everywhere Greece has surrendered even before than the expected. The Greek government has finally asked for the activation of the European mechanism of aid with collaboration of the International monetary fund (IMF), the fears of defaulting on the Greek economy decreased a bit and his risk prime of Greek debt at 10 years decreased from 578,6 basic points of difference with Germany to 560, by 3,4% less in just one day

The punishment continued for Portugal (from 190.6 to 190.4 basic points), and specially for Spain (from 88.78 to 91.9 basic points). The president of the Central German Bank, Axel Weber, Warned that many countries have excessive budget deficits, and for that reason “the risk has increased”.

According the analysts the next country in continue the steeps of Greece, seems to be Portugal. Simon Derrick, chief strategist of currencies in the Bank of New York Mellon, assured that “it seems easy to see which piece will fall next in Europe: Portugal”

Many experts, put Spain immediately after the Portuguese economy as warned in the beginning UBS, but the crisis of Spain could be more than a crisis of debt and credibility, a crisis of liquidity.

José Luis Martínez Campuzano, strategist of Citi in Spain, believes that “the one of Spain is more a problem of liquidity than of national risk, because the Spanish treasure will have to use more, and during a longer period of time, the markets than other European treasuries”. Spain is facing in July a tsunami of debt expirations of €25,000 million, a “obstacle” that will challenge the strength of Spain, warned Barry Knapp, strategist of Barclays Capital.

The step given by Greece is important for two reasons, in first place “the markets believe that, arrived in that point, the help of the IFM and the European Union is essential to ensure that Greece can fulfill their financial objectives”, according Unicredit. Secondly, the supervision of the IFM will be essential to inspire the investors to trust in the capacity of Grece to adjust their finances”. In two weeks, the technical commission of the IMF, the ECB and the European commission that is negotiating with Athens the conditions of the aid and a stabilization program will have to release their conclusions.

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