Well, where does Greece go from here?
Search us, in so far as we were able to decipher official European views following Thursday’s spike in Athens’ debt costs.
As for where Greece is going on Friday? It seems that’s into one-year and six-month T-bills, in two issues to be made on April 13 and April 20. All part of normal procedure, we should add.
According to BarCap’s Laurent Fransolet, raising the €2.3bn would fulfil Greece’s immediate cash requirements until mid-May, and is a relatively risk-free prospect, mostly for domestic investors. So it’s not going to be a helpful barometer.
In any case, on to what Europe thinks. From Reuters on Friday, the Italian view:
12:12 09Apr10 RTRS-PARIS-BERLUSCONI: ITALY, FRANCE MUST HELP GREECE IN ORDER TO AVOID NEGATIVE CONSEQUENCES FOR EURO
Thank you for that, Silvio. Meanwhile, the French view, also via Reuters:
12:26 09Apr10 RTRS-FRANCE’S SARKOZY SAYS WE ARE READY TO HELP GREECE AT ANY MOMENT
But this is the problem. It seemed elsewhere on Friday that the eurozone’s readiness to help wouldn’t be fleshed out in its details in the medium term.
As European Union president Herman Van Rompuy said in a Le Monde interview on Friday (translation ours):
We decided to establish a funding mechanism based mainly on bilateral lending in the euro area and the intervention of the International Monetary Fund. We must make the agreement operational. It will only be credible if it is operational.
Discussions are underway to determine the technical and practical mechanism. The meeting of finance ministers of the Eurogroup, mid-April, will succeed in finding solutions to outstanding problems, if there are any left.
Which is quite frankly a world away from the view that the IMF will have to support Greece from this weekend onwards. On which speculation, Van Rompuy adds:
But there is mad impatience. That there are differences of view on this subject, there is nothing more normal. What is not normal, are rumors, gossip and leaks. Various factors explain the behaviour of markets: everything does not depend on political signal and details of the mechanism.
Well, conversely then — even a detailed plan might not convince markets?
Finally — we can’t not include the all-important current position in Berlin. According to Reuters:
A German Finance Ministry spokesman said the financial safety net for Greece that euro zone leaders agreed late last month remained in place but that Athens had not asked to make use of the facility.
“There is no reason to doubt that Greece will succeed in refinancing its debts,” the spokesman told a regular government news conference. “We still believe … that Greece can reach its goals on its own.”
No one should doubt that the euro zone and the IMF would help Athens if needed, the spokesman added.
Note the lack of comment on the recent key Greek-German bones of contention, such as the rate that could be charged on any emergency loan to Athens. George Soros has already attacked Germany’s ambiguity on this rate, as BusinessWeek reports.
In short, we’re no nearer to the truth than what the Economist’s Charlemagne heard from sources on Thursday, on the loan rate and much else:
…what I now think is going on is this. The circle will be squared by an mechanism—agreed by officials from the European Commission, the European Central Bank and various national governments—designed to calculate some sort of “fundamental” market price that reflects the real-world plight of Greece, and strips out some of the sound and fury of the market turmoil engulfing that country today. That fundamental price would not be a walk in the park, but it would be a lot less brutal than the current demands of the market.
Greece and help from the eurozone: a riddle wrapped in a mystery inside an enigma. To paraphrase something someone or other once said.
Related links:
CDS report: Greek default not an issue? – FT Alphaville
Want to help Greece? There’s an account for that – FT Alphaville
The Greek tragedy, recapped – FT Alphaville