EUROZONE: Markets Drop Again...As Greeks Slowly Sort Out Their Politics.

GUARDIAN

European markets dropped again...to a 3-month low on Greek debt worries. Japan's market also fell.

PM George Papandreou says he will reshuffle his cabinet and seek a confidence vote.
His government had only a 4 vote majority...and 2 party members have defected.

FM George Papaconstantinou is now the target for protestors and the conservatives...because of his austerity proposals.

The conservative party led by Antonis Samaras reportedly opposes spending cuts...and instead wants tax breaks and renegotiations with creditors.

The markets don't care who governs. They want agreement... so the IMF or somebody will pay the next tranche. They simply fear...contagion.

"It is the contagion effect, which is unnerving markets. It is not just about Greece, but about who is the next," said the head of investment dealing at a fund company that manages $80 billion. "We need a proper long-term solution, not a plaster."

The WSJ quotes an observer at MF Global.
It goes something like: "...the guys with the cigars don't like rioting. It makes them uncomfortable...and says to them...that it is time to head for the sidelines."

AP  1:10 Video Report
http://www.youtube.com/watch?v=5J5KEc7AWeQ&feature=player_embedded

EUROZONE: An IMF Loan For Greece Is A Dangerous Precedent.

NYTIMES/ Analysis/    If Greece asks the IMF for help to solve its debt problems, as one minister has threatened, it would signal that Europe can't solve its own problems. “It would be damaging for the euro zone going forward because it would sow seeds of doubt about whether this is really a currency union, or just a group of countries that share a currency,” said economist Simon Tilford. No eurozone nation has borrowed from the I.M.F. since the EU's inception in 1999 and no major European nation since Britain in 1976.

EUROZONE: Slowly Moves Towards Greek Bailout.

NYTIMES/    Negotiations continue over the Greek bailout with the Germans demanding even more austerity measures in order to obtain loan guarantees from the German and French governments and banks. For political cover, German Chancellor Angela Merkel is reportedly not ready to sign off until Greece has pushed through further cuts. But Merkel is also under pressure to protect the euro from the consequences of a Greek default. 

THE E.U.: Greece's Debt, Inability To Say No To Strikers, Is Threatening The Euro.

NYTIMES/ Bond watchers fear that Greece's new government led by socialist Prime Minister George Papandreou may not cut public wages and pension payments that make up 51 percent of its budget and contribute to its surprizingly scary 12.7% deficit. And those fears are now spreading to Portugal and Spain's fundamentals. Greece set-up this crisis by severly underestimating deficits for several years, testing its credibility.