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Uh oh! The Greeks are getting schooled again. I talked about Greece getting a visit from representatives of the Troika yesterday and it seems that they weren’t impressed!

The official assessment won’t be released until after a month. However, if the remarks are any indication of what we can expect, it seems that it would be a good idea to start bracing for the worst.

Three EU officials said that the debt-ridden country needs further restructuring as its balance sheets show that it doesn’t have enough cash in its coffers.

According to them, the last elections only got in the way of making any real progress. The latest growth estimates also show that the country would likely contract by 7% this year, and not just 5% as previously predicted.

I know, I know, this isn’t exactly shocking news. However, it’s noteworthy to point out that this evaluation is coming from the people who have been tasked to make the call on whether or not Greece should get more external help.

In fact, some analysts say that recent developments in Greece are to blame for the drop in inequities and the euro yesterday.

The Dow Jones Industrial Average was down around 1.2% in yesterday’s trading around 12,553 while the S&P 500 Index tapped fresh intraday lows around 1,331. As for EUR/USD, it tapped a new 25-month low at 1.2042.

What’s next for Greece and the eurozone?

Recall that Greece’s second bailout package from the EU and IMF came with a strict requirement to trim its debt by 100 billion EUR through austerity measures and tax increases. In line with this, Greece has to reduce its debt-to-GDP ratio from 160% to 120% by 2020.

With financial authorities claiming that Greece is way off track with its goals for this year, many believe that Greece wouldn’t even come close to reaching its 2020 goals, let alone stay in the eurozone.

For now, the IMF might decide to take back Greece’s second bailout package since they mentioned that they wouldn’t tolerate any more missed targets.

This means that the ECB, along with eurozone member states, would have to deal with the damage all on its own. One option for them is to start scrambling to restructure nearly 200 billion EUR in Greek debt.

Another option is to accept huge losses by writing off some of their Greek debt holdings or adjust the terms and allow Greece to pay them back at a longer time frame and at lower interest rates.

What does this mean for the euro and the forex market?

This fresh wave of Greek debt problems suggests that risk could be off in the near term unless Greece is magically able to prove that it’s actually meeting its bailout requirements. Bear in mind that Spanish and Italian debt woes are also waiting in the wings, adding further downward pressure on euro pairs.

Despite the choppier market conditions this summer season, it is possible that we’d see a repeat of the massive euro selloff that we witnessed when rumors of a potential Grexit and a eurozone breakup first started circulating.

Analysts predict that EUR/USD could drop below 1.2000 soon enough as investors have fewer reasons to hold on to a shared currency whose very existence is in jeopardy.

Aside from that, speculations of QE3 from the Fed and its negative impact on the Greenback are likely to take the backseat for the meantime as traders focus on the uncertainties in the eurozone.

After all, Fed officials haven’t exactly reached a decision on QE3, which implies that the likelihood of further easing from the ECB is considerably greater at this point.