The Trader has argued that the Greek mess will soon be spilling over to the Iberian Peninsula. As the Spaniards now start feeling the austerity pinch for real, and realize Zapatero & Co have not done a great job, this Sunday huge protests have taken place in many Spanish cities. There are reports of more than 500 000 people protesting in Madrid and Barcelona alone. Watch those Spanish spreads, as the country probably is the real elephant in the European room. People are angry. From El Pais;
The conservative government of Mariano Rajoy had its first taste of widespread social unrest on Sunday when hundreds of thousands of citizens took to the streets of major cities to protest far-reaching labor reforms.
Another must read “Hmmm” report, courtesy Grant Williams.
One way or another, we are no more than weeks away from the first de- fault in the history of the Euro.
Yes, I know the Greeks have promised to give the Troika what they want in the way of cuts and expanded austerity. Yes I know we have been promised that we will have a ‘solution’ by last week February 15 Monday, but let’s get real for a second here, shall we?
The situation breaks down like this:
The Greeks have been told that, in order to receive the €130 billion €145 billion bailout they so desperately need, they must agree to sweeping new cuts and promise to implement them.
Not implement them. Promise to implement them.
Guest post by D Short.
The 2012 rally accelerated last week as the average gain of our basket of eight markets rose from 0.06% the previous week to a stellar finish of 2.27%. World leadership was generally consistent with last week, with the Asia-Pacific region taking three of the top four spots. The Shanghai Composite is the exception to the geographic pattern, dropping from second place to the cellar. Despite its weekly gain of 1.38%, the S&P 500 again found itself in the bottom half of the pack, but finishing above the FTSE 100 and Shanghai Composite.
The adjacent table shows the 2012 year-to-date performance of our gang of eight. Four markets have double-digit gains at the end of seven weeks, with the Nikkei’s outstanding 4.88% gain over the last five sessions putting it into the double-digit club. The other four markets continue to have healthy single-digit gains. On a YTD basis even the worst-performing FTSE 100 has an impressive gain of close to six percent by mid-February.
The Greek saga is reaching ridiculous proportions. Troika on/off, IMF on/off, Deal(s) on/off. The situation is definitely the tale of the Emperor’s new clothes. Any intelligent person realizes Greece must leave the EZ sooner or later. Of course, there is no politician willing to deliver the harsh message, but we are reaching the point of the Big stop loss regarding Greece. Accorfding to the Telegraph Germany is planning for the Grexit;
The German finance ministry is actively pushing for Greece to declare itself bankrupt and to agree a “haircut” on the bulk of its debts held by banks, a move that would be classed as a default by financial markets.
Eurozone finance ministers meet on Monday to approve the next tranche of loans from the EU and the International Monetary Fund, designed to stave off national bankruptcy while the new Greek government puts the country’s finances in order.
But the severe austerity measures being demanded have caused such fury in Greece, and the cuts required are so deep, that Wolfgang Schäuble, the German finance minister, does not believe that any government would be able to implement them.