It appears from reports (Reuters) that the Greeks are making more conciliatory noises as the government has been informed that monetary support for the banking system is running thin on the ground. This is a significant issue after the ECB, Europe’s politically impartial (!) lender of last resort decided to reduce the liquidity available to Greek banks to a single, drying up line of Emergency Liquidity Assistance (ELA), even as they are clearly seeing a run on deposits that has been going on for weeks. I think we can all agree not the most helpful move
Whether this is real news or media speculation remains to be seen. The view earlier today of the Telegraph’s AEP was that most of the back and forth news on the issue is media driven and the two sides are pretty well dug in. Indeed looking at the situation via Game Theory, of which the Greek Finance Minister is a leading expert, it has been argued that neither side can move from their entrenched position without losing complete credibility, with both sides both assuming there is too much to lose for the other side not to give in.
This view has since then been given credence by the words from Dutch finance minister Dijsselbloem who is “very pessimistic” that an agreement will be found in the near term.
In the meantime unexpectedly strong final quarter German growth, which has been translated into the old chestnut of Eurozone growth, because the fruits are obviously evenly distributed….no that’s wrong isn’t it…anyway…with Germany having a good three months and stories of Greek capitulation markets have been rallying strongly, despite a string of disappointing macro indicators coming from the US over recent days.
It all feels very odd and I don’t like that as we enter a weekend, as it tends to be at weekends, when the financial system is largely shut, that big things happen. It also strikes me that an annoyed US, who are rightly exasperated by EU myopia, could easily step in and refinance Greece without it making a mark on their already vast balance sheet, while simultaneously poking Vlad in the eye.
Indeed with the amount of creative financial ledgerdemain that has taken place over recent years the fact that this is all getting so worrisome is daft, so perhaps markets are right to be sanguine and keep going up.
Value and analysis make little difference at the moment (unless you are looking at Tesla’s accounts, which is a comedy show of non-GAAP -Generally Accepted Accounting Principals – items……that company is so not going to make it long term….) so I’m hoping for an incident free weekend.
I hope yours is equally peaceful.