Trapped in the Eurozone: Why Greece MUST reduce Fiscal Deficit

The IMF has asked Greece to focus on reducing its fiscal deficit. It can't ask it to change interest rates or exchange rates since Greece is in the Eurozone. There have been other situations when borrowers only had fiscal policy to rely on e.g. $30bn rescue of Brazil in 2002 (the indexing of Brazil's debt to USD or STIRs precluded the use of monetary policy). The bailout of Brazil was also in American interests: General Motors had invested a large amount in Brazil, Citigroup had $9.7bn in Brazilian loans.

Monday Onslaught on Sterling: FIscal and Political Fears

Speculative selling drove the pound down below the $1.50 watermark, it's weakest level since May09 following weekend opinion polls that there could be a "hung Parliament" (in which no one party has a majority of seats). This was compounded by the news of Prudential buying AIG's Asian business for $35bn (of which $25bn will be in cash (70%) for which it would have to sell sterling to raise funds.

GBPUSD is known as cable (the number of dollars you need to purchase one pound). An increase in cable indicates a strengthening of sterling (with respect to the dollar).