He walked into my office and threw the manuscript on my desk with a thud.
“It’s called Thankful For Zombies. A zombie story where…”
“Nope,” I said.
His face deflated like a balloon. “But I didn’t even…”
“Zombies are overdone,” I said.
“But this is a zombie story with a twist!”
“Zombie stories with twists are super overdone.”
- Scott Alexander, Dec 7
And he has a point. BUT he didn’t mention the French corporate sector. A large mistake exposed by BofAML’s Gilles Moec, who revels in the narrative freedom that mistake implies. Read more
Eric Dor of the IESEG School of Management in Lille has a handy table. Click to enlarge…
So, the Greek government has left this latest, very long, round of eurozone marriage counselling to head into, well, predictable domestic acrimony with headlines like “Crucial Test for Greek Coalition” trailing in its wake. From the ekathimerini:
“We did everything we could. We achieved significant improvements,” noting that Greece would remain in the euro if the package was passed and otherwise risked “descending into chaos.” “It is now down to the sense of responsibility of all political parties and each individual MP,” Samaras said.
Democratic Left issued a rejection within minutes, saying it does not agree with the outcome of negotiations with troika and repeating its objection to labor reforms.
JP Morgan’s Alex White points out that the next few weeks are going to be critical and that this one is likely going to the wire… again. Read more
Here’s a chart from Nomura:
Citi are pushing that fateful day back:
We have held the view, since May 2012, that a Greek exit from the euro area (“Grexit”) in the next 12 to 18 months is a high-probability event (90%) which we assume, for the sake of argument, would happen on January 1 2013. We are now cutting the probability of Grexit over the next 12-18 months to 60% and judge that this event will probably happen later than we previously thought, most likely in 1H 2014.
A cynic might suggest they were getting the jitters as deadline approached but lets hear them out (our emphasis). Read more
Apparently that Greek shortfall is even bigger than the even bigger figure reported in the German press on Monday.
From Eurointelligence: Read more
That’s a couple of the examples of preparations that US companies are making for a Greek eurozone exit, according to the New York Times.
Here’s the trucks: Read more
If you hit your head hard enough, you’re bound to start forgetting things.
We can’t get enough of these — predictions for the format that the ECB’s new, “convertibility risk”-focused bond-buying programme might take.
This one’s from Citi’s Global Economic Outlook for August, which dubs the expected ECB operation the “Conditional Government Bond Purchase Programme” (snappy!). Citi forecasts that the ‘CGBPP’ will concentrate on buying T-bills. These are usually protected from losses during a sovereign debt restructuring: Read more
The drum beat of Euro grandees hinting that Greece should just get out of the Eurozone is getting louder once more. Here’s former Bundesbanker Otmar Issing discussing the matter in simple language for the audience of CNBC…
Click to view. Read more
We asked, and you answered by completing FT Alphaville’s (wholly unscientific) survey on Tuesday.
hastily put together intricately designed poll reveals that 41 per cent of finance professionals, students, developers, and random people* think that Greece will exit the euro within the next year. Read more
The recent utterings from Europe’s political elite regarding a Greek exit from the euro and reports that the IMF is ready to walk away have been hard to read. To what extent are these warnings pure postulation? The timing is rather suspicious, given that they have coincided with the Troika delegation’s visit to Athens to assess how the austerity programme is coming along.
On the other hand, if they reflect the mood among the policymakers, there is reason to be worried, especially given how freely and eagerly they are now discussing a potential exit. Read more
Citi’s iconoclastic chief economist Willem Buiter and team are seeing a very high likelihood of a Greek eurozone exit in the not-too-distant future, and a sovereign bailout likely for both Spain and Italy this year.
From their latest global update (our emphasis): Read more
Capital Economics’ Roger Bootle has won the £250,000 Wolfson Economics prize for finding a practical way to break up the eurozone.
Though, as it turns out, Bootle doesn’t think it would be all that practical. Read more
FT Alphaville didn’t enter the Wolfson economics competition, in part because our pizza drawing skills don’t pass muster, but Nomura’s Jens Nordvig and Nick Firoozye did. Their entry landed them one of the five finalist spots (more about those here).
Ahead of the announcement of the winner on Thursday, the pair have published a rather interesting and disturbing list of what they learned in the process of eurozone breakup solutionising. It won’t please anyone who’s been arguing that a break-up might not be such a big deal. Here’s a tl;dr version of their list of grim learnings: Read more
We already knew we’d have to watch for a Spanish banking bailout request tomorrow.
Now comes Moody’s with a report warning that “recent developments in Spain and Greece could lead to rating reviews and actions on many of the euro area countries” — and offering a generally downbeat if less-than-original assessment of the euro zone’s future in general. Read more
We’ve all been griping about the “bank jog” that has been eating away at the Greek banks’ deposit base — €70bn or so of deposits flying out of the country’s banks seems to be a bad news no brainer.
But what if the scale of the flight has a counter-intuitive positive side? (Although “ever so slightly less negative side” would probably be a better description.) Read more
The pound has been the strongest performing G10 currency so far this year, even though it has been weakening of late against the US dollar and Japanese yen.
Grexit not this year. Maybe in 2013, with a 10 per cent drop in GDP. Continued financing from the IMF and the EU (through the Balance of Payments Assistance facility, possibly) to cushion the blow.
All those prognostications and more… Read more
The little guy always gets ignored, as these charts from Nomura’s Jens Nordvig and Dimitris Drakopoulos show:
Another day… another round of eurozone soul searching. This time UBS has sent out a Tuesday triptych of eurozone angst.
The first note, from Paul Donovan, covers off the flaws in the eurozone’s conception (little new ground but always worth remembering) and touches on Target2 liabilities and parallels: Read more
We pointed out on Friday that a poll suggested Greeks were far from wanting out of the eurozone and would actually return to New Democracy in adequate numbers for a pro-bailout coalition to be formed. From Reuters:
The poll, the first conducted since talks to form a government collapsed and a new election was called for June 17, showed the conservative New Democracy party in first place, several points ahead of the radical leftist SYRIZA which has pledged to tear up the bailout. Read more
Courtesy of Eric Dor, Director of research at the IESEG School of Management, Université Catholique de Lille: