Germany Rejects Greek Proposal, S&P Dismisses Grexit Spillover Risks

Hours after the Wall Street Journal published an opinion piece dubbed "Greece Is Making an Offer Germany Can’t Refuse," the German government did just that. Apparently Ms. Merkel is not an avid reader of the renowned publication and the tone of the proposal this morning didn't sound appealing enough.

Just after Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term Magnates reported that the likelihood of any sort of deal coming from the Greek proposal is very slim, the German government has exerted its influence. There really doesn't seem to be much ground for talks between the creditors and Greece. The latter keeps making no concessions to its demands for easy financing without any commitments.

S&P Report States Greek Exit Unlikely to Cause Spillover Effects

Just as the news about the German rejection of the proposed bailout terms came in, ratings agency S&P has taken the Greek government's negotiating tactic with a large grain of salt. In a report issued by the company, S&P highlighted that a Greek exit would have limited contagion risks to the rest of the Eurozone economies.

As the country exits from the single currency area, the ratings agency argues that a default on all of its Obligations Obligations In finance, an obligation is a financial responsibility where the terms of a contract must be met. Should an obligation between parties fail then the party who is at default may face legal action. In this scenario, the guilty party will not only have to agree to pay the set amount to fulfill the contractual arrangement but may also be responsible for covering all legal proceedings cost. Routine payments or outstanding debt of any kind are considered financial obligations, so if someone owes you In finance, an obligation is a financial responsibility where the terms of a contract must be met. Should an obligation between parties fail then the party who is at default may face legal action. In this scenario, the guilty party will not only have to agree to pay the set amount to fulfill the contractual arrangement but may also be responsible for covering all legal proceedings cost. Routine payments or outstanding debt of any kind are considered financial obligations, so if someone owes you Read this Term is very likely, but the event would not constitute substantial financial risks for the remaining Eurozone members.

The ratings agency report continues stating that a Grexit event would not lead to contagion driving other sovereigns to ditch the single currency. We can only agree, as there is a very slim likelihood that the populist leftist parties on the rise in southern Europe will continue to enjoy the support they currently have after SYRIZA eventually drives Greece out of the Eurozone.

The report concludes explaining that the Greek ties to the financial markets have been substantially reduced since the country was last on the brink of exiting the Eurozone in 2012. S&P states that the European Financial Stability Mechanism should be enough to mitigate risks to other countries and that the financial burden to other sovereigns will be absorbed over the next decades.