Muted Market Reaction limits Greek leverage in negotiation with EU

The EU and Greece continue discussions to address Greece's demands to restructure its bailout terms and austerity program.  So far, the opening EU response to Greek demands has been "nein." "Nein" has been followed by haggling over the wording of non-binding joint statements.  Much to the chagrin of the Greek Leadership, World Market reaction has been quite muted to the slow moving "negotiations."  Even as world markets open on Friday the 13th, the headlines are far from frightening.  "Now They're Talking - Greece and Germany work toward a Compromise" is the Headline on bloomberg.com. The headline underneath says "Good Feels - Asian Stocks advance with Emerging Currencies."

As details of the EU-Greece meetings continue to leak, its clear that that EU Finance Ministers are sticking together to jointly demand that Greece continue to follow the original bailout program.  Greek Prime Minister Alexis Tsipras and Greek Finance Minister Yanis Varoufakis have continued to warn of dire consequences (both inside and outside of Greece) if Greece's bailout terms are not amended.  Despite these warnings, the EU can continue to play hardball with Greece while world markets continue to rise or stay at the same levels.

Recent bailouts in Europe and the US have been deeply unpopular, but they were able to pass due to extreme market volatility.  Plummeting stock prices in the US and rising sovereign bond rates in Europe forced leaders to vote for bailouts.  However, continued recent stability in world stock and bond markets aren't helping the Greek's to convince the EU that dire consequences are just around the corner.  Until world equity and credit markets make EU leaders pay for a hardline stance with Greece, "Nein" will be the title of this Greek Friday the 13th film.