The European Union today disbursed 7.16 billion euros ($7.7 billion) to Greece so it could clear its arrears to the International Monetary Fund and meet the next payment to the European Central Bank. Most of the money -- 6.8 billion euros -- will be gone today, so only Greece’s standing with its creditors, not its financial condition, will improve. Still, the disbursement means European leaders are willing to help Greece stay afloat as it prepares to enter its third bailout amid political turmoil that may mean a new election in the fall. To give ordinary Greeks some hope of better times, the government today reopened the banks. Depositors, however, can only withdraw 420 euros a week (all at once), which isn't much of an improvement on 60 euros a day.
It may look like rainclouds are lifting a little, but financial markets remain closed and a fresh Bloomberg survey of 19 economists says the Greek economy is likely to shrink 0.7 percent this year. What's more, German Chancellor Angela Merkel still insists that any debt restructuring can only involve maturity extensions, not forgiveness, and only if Greece follows through with the austerity measures it agreed to a week ago. It’s going to be a long, hard slog unless Greece decides to give it up and leave the euro zone after more political upheaval.
Editor's note: Greece Default Watch is going on hiatus until, well, until the next near-default.