In a surprising turn of events, Eurozone leaders cancelled a scheduled meeting in Brussels today – in order to further review the details of the proposed fiscal plan submitted by the interim Greek government.  The new proposal would essentially pump about $172 billion dollars into an economy that contracted by 7% last year – and be created in order to reduce the overall public debt load to 120% of GDP in the next 10 years from the current 160%.  The cancellation has some in the market wondering if Greek official have enough time to make due on currently running obligations.  And, if not, will the country ultimately leave the Eurozone.

Given Eurozone leader sentiment and their current track record, the tea leaves are pointing to an inevitable approval of the second bailout for Greece.

Political and financial leaders in most of the major Eurozone member countries have been working too hard to decide to drop the proposed measure.  Especially when Greek leaders were able to bend over backwards, approving strict austerity measures that were outlined by the Troika – or officials at the International Monetary Fund, European Central Bank and the European Union.  The strict measures are expected to keep Greece reeling in the the current recession slump for the next several years – and include large pension cuts and a 20% cut in the minimum wage level.

The fact is, with the amount of time that has been put in on both ends, as well as the countless quotes on Eurozone commitment, Eurozone finance ministers (and the world) would see it as being in bad taste to drop everything now.

A failure to allocate the second bailout could cause an end of days scenario in the markets.  Namely both the currency and bond markets would be privy to extreme volatility as global investors race to the exits.  The euro would sink – and more importantly bond yields across Europe would rise.  The latter would be more devastating for the zone as it would increase the cost of bailing out any other periphery country – which some have noted as Portugal being next.  The cost would increase astronomically and likely end in a dissolution of the overall zone.  Not a good scenario for Europe.

Without a resolution, especially at this stage and time, European leaders may well be doing more damage to the current situation than helping it by delaying the inevitable decision.  This could weigh on the Euro in the coming days, especially if the decision is pushed back till next week.

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