Less than a day ago ECB president Mario Draghi was bragging “Credit Crunch Averted” noting the Euro’s first weekly gain in five-weeks. Unfortunately for Draghi, there was still one day left in the week.

Greece Bank Creditor Group Says Talks ‘Paused for Reflection’

Bloomberg reports Greece Bank Creditor Group Says Talks ‘Paused for Reflection’

Talks between Greece and its creditor banks were put on hold after negotiations in Athens failed to yield an agreement.

A proposal put forward by the steering committee representing financial firms has “not produced a constructive consolidated response by all parties,” the Institute of International Finance said in an e-mailed statement today. “Under the circumstances, discussions with Greece and the official sector are paused for reflection on the benefits of a voluntary approach.”

The IIF’s Charles Dallara and Jean Lemierre had met for a second day in Athens with Prime Minister Lucas Papademos and Finance Minister Evangelos Venizelos, aiming for a deal in the euro area’s first large restructuring. The committee had offered a 50 percent nominal reduction of Greece’s sovereign bonds in private investors’ hands and as much as 100 billion ($127 billion) of debt forgiveness, the IIF said.

Greece hasn’t yet decided whether to submit legislation that could force holders of the nation’s debt to take part in a bond swap, according to a government spokesman who said his earlier remarks on the matter were misinterpreted.

European Debt Downgrades

Reuters reports S&P; to Cut Some Euro Zone Countries on Friday

Standard & Poor’s is set to downgrade the credit ratings of several euro zone countries later on Friday, but not those of Germany and the Netherlands, a senior euro zone government source said.

Another source confirmed “several” countries would be hit.

French TV, citing a government source, said France’s credit rating would be downgraded and another source said Slovakia, the euro zone’s second poorest country currently rated A+ by S&P;, would suffer the same fate.

Euro Sinks to New Low for the Move

On some combination of the above news, the Euro reversed strong gains, falling to a new low for the move, down to 1.2627 from a high of 1.2884. That is a very big intraday currency swing of 2.57 cents vs. the US dollar.

Euro 15 Minute Chart

Creditors “Paused for Reflection, so should Mario Draghi.

Mike “Mish” Shedlock
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