This morning while the IMF was puffing on its announcement that it would meet and agree the plan and loan for Greece the Greeks themselves and the bond market, had other ideas. The Greeks went for the general strike and occupation of the Acropolis option. I think the socialist government is going to fall. For the simple reason that poor Greeks have got it clearly in their minds that the wealthy tax-avoiding Greeks created this crisis, but they, the poor, are expected to suffer the consequences.
The bond market, for their part, decided to play for keeps. CDS on ALL the so called PIIGS exploded this morning.
The bond speculators have so far forced insane interest rates out of Greece and made the ECB grovel to them by saying it would buy any old shit just to try to save the banks that were drowning. Naturally enough those speculators, and that is the correct term for them, (those who care for short term private profit ONLY – and for whom other considerations exist in some dimension they have no access to), those speculators have now turned their attentions to Portugal, Spain and Ireland. And why not. The bond buyers are looking at a real risk of euro contagion and at least one default or ‘restructuring’. And the CDS speculators – those who are buying the CDS not the bonds themselves – they are playing the ECB and Germany at the same game Sorros played with the UK. He won. So will they. And the know it.
There are even whispers about Germany’s credit rating being looked at – expressed in the most whispered tones you understand – but still.
The bond market will not believe in any bail-out so long as there is the possibility that the people, at some point, could turn around and throw the deal and the government who made it, out the window. And that is the problem for the EU and the IMF. In a word – people – they are a problem. They sometimes just won’t do what their betters require. THANK GOD!
The fear on contagion is not financial contagion or debt contagion, those have already taken hold. The real contagion the financial class is worries about is political contagion.
Stocks in Europe made a feeble attempt to rally. Within seconds Marketwatch proclaimed Europe stocks rally. 5 minutes later the rally and the headline were gone. Everything is red again. NY will open down and slide.
http://www.guardian.co.uk/business/blog/2010/may/05/eu-debt-crisis-greece-live-nlog?CMP=AFCYAH
oh dear, civil unrest has hit greece
As we all knew it would. Why should the poor suffer for the sins of the wealthy while those very same wealthy people look on and laugh from their verandas?