Thursday, 14 January 2010


As of this morning, we have an Updated Stability and Growth Programme. I will read and report in detail, but it appears that markets are not impressed.

Also not impressed is Angela Merkel. I can hear George MUPPET Romaios scribbling away...

Also, there was a rather unnecessary ECB clarification of the fact that Greece is not going to jump or be pushed off the Euro barge. If for not other reason, then because doing so would send our credit rating to Junk according to S&P. Moody's also made it clear we're on negative watch and, like Portugal, are facing a "slow death" if we do not act fast.

Let me make this clear. S&P's comments mean that if we were not an EMU [not EU] country, our bonds would be not be investment-grade. What, then, is the deciding factor between BBB+ and Junk for Greece? The influence of our Eurozone partners on our political leadership, the ability of our political leadership to convince their followers that our Eurozone partners are right, and the implicit guarantee on Greek debt that most people believe our partners will honour.

The point here being that anything the weakens the influence and goodwill of our partners or the continuity of our leaders' commitments is bad, bad, news.

Given this difficult balance, it was probably not a good idea for us to draft a law allowing the restructuring of consumer and business debt to an extent that would have region-wide effects on bank liquidity, and then try to sneak it past the ECB.

But is there an implicit guarantee from and for Eurozone members at all? I ask because of course the IMF have been invited to Greece very recently. Ostensibly they are here to mentor our government. The way I see it, the only kind of mentor they can be at this point is Simon Cowell, so really it must be a fact finding mission.

More of this when I update later.

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