Another round of protests kicked off in the streets of Athens, Greece as the country braces for another round of austerity measures. The government is promising deeper spending cuts, and more job losses are expected for the public sector.
Greece is trying to convince international lenders to give it more money before it runs out of cash by next month, but the International Monetary Fund, European Central Bank and European Union don’t appear ready to sign on just yet.
The so-called Troika will meet again at IMF meetings this weekend.
Gary Stern, former president of the Minneapolis Federal Reserve, says a Greek default is not a matter of if, but when.
“There might be something to be said for a default or a restructuring or whatever you want to call it, sooner rather than later, but of course there is likely to be some consequences for other countries that are currently part of the euro that may exacerbate the situation if this is not handled quickly and in an orderly fashion.”
That’s being closely watched by the Federal Reserve. Policymakers are largely expected to announce new measures to get the U.S. economy back on track on Wednesday, following a two-day meeting.
And another bleak housing report was sure to add more urgency to that discussion. Construction of new homes fell more than expected in August.
In corporate news, General Motors and the United Auto Workers have a new contract. The tentative agreement will create more than 6,000 jobs in the United States, according to the union. This was the first labor deal since a government bailout of GM two years ago.
Turning to market reaction – Wall Street gave up all, or nearly all, of its gains on worries of a possible Greek default.
European markets finished higher despite Monday’s downgrade of Italian debt by Standard & Poor’s.
Bottom line: Greece will continue talks at IMF meetings, but a former Federal Reserve official says Greek default is just a matter of time. GM reached a deal with United Auto Workers while Wall Street was mixed, waiting on the end of a two-day Fed meeting.