Greece Gets Ready to Make Serious Reforms

Greece has announced a reform package that includes higher taxes in order to try and get the country back on the right track fiscally. Euro zone leaders have applauded the efforts, and are now trying to figure out how to best support Greece in its efforts. 

GFT's Boris Schlossberg reports in FX360 on the situation with regard to Greece:

As of now it appears that Greek authorities are making a serious effort at reform, but the social costs of such moves could prove exceedingly painful if growth in the region does not accelerate. The combination of higher taxes and lower wages is unlikely to be tolerated by the populace for long and could result in massive political backlash, if it triggers a severe recession in the country.

EU authorities must walk a fine line between enforcing the proper fiscal discipline on Greece in order to ensure the credibility of the stability pact while at the same time avoiding the draconian measures that would radicalize the Greek populace and turn them against EU membership.

It's a fine line indeed (as Obama is finding out as he prepares to raise taxes), and the euro is still showing weakness today in forex trading. On the currency market, the euro continues to fall against the U.S. dollar, as equity markets struggle in Europe and forex traders wait to see how things go with Greece.