Greek leaders are at it again.  Following a round of talks between interim Prime Minister Lucas Papademos, major factions in the Greek government decided to cut discussions short – and to reconvene tomorrow – following disagreement with some policies set forth by the Troika (European Central Bank, European Commission and the International Monetary Fund).  The crux of the argument seems to be the growing sentiment that the three major commissions are putting forth aggressive austerity that will place the Greek economy in a perpetual recession.  The disagreement had kept the Euro lower for most of the overnight session, allowing the single currency to fall as low as 1.3029.

Without any agreement among Greek leaders, the probability of a final resolution to the Greek debt matter dwindles.  The absence of an agreement complicates matters as it remains key for Greece to receive the second bailout in the amount of 130 billion euros – primarily to make good on a 14.5 billion euro payment at the end of March.  The possibility of a breakdown is angering both French President Nicolas Sarkozy and German Chancellor Angela Merkel.  Both met in Paris today, amidst speculation that a final resolution wasn’t as forthcoming as previously thought.  Outraged, President Sarkozy noted that given “an agreement has never been so close”, “we have to conclude it.”  Both leaders noted that “time is running out”.

The comments are likely to be well received by the market as traders are seeing a likely stay of the European Union.  Although there are still some expecting a member country to be let go from the Union in the next two years, it seems that the majority is now in the belief that the Eurozone isn’t going anywhere.  Money market yields have declined confirming the sentiment – which could lead to further medium term Euro appreciation above the 1.3200 exchange rate.