Not surprisingly, Greece has officially asked for EU/IMF help. The melt down in their bond market this week made it an inevitability. The 45b of euros that will come their way will help in the short term but for the long term financial health of the country, it just bides time for an economy that will highly unlikely be able to grow out of their trouble and will at some point be back for more help. A debt restructuring would have been the best long term option for them, however painful in the short term it would have been. A region of bailouts for profligate countries does not a healthy union make and maybe that’s why the euro is seeing no bounce on the news. Greek bonds are rallying, CDS are narrowing and stocks are higher. Also helping European stocks was the April German IFO business confidence # which was 3 pts above expectations at the highest since May ’08.

US Treasuries are selling off after cnbc is reporting that more members of the Fed are pushing to start selling their $1.25t of MBS at some point soon. The FOMC meets next week and the pressure is clearing building on them to do something, whether thru rhetoric or action, to reverse their emergency monetary policy and QE that has been in place beginning in late ’08. Asset sales will likely be the first step of this process but considering the dovish stance of Bernanke, Kohn and Yellen, it won’t happen imminently.

Category: MacroNotes

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One Response to “Greece officially asks for help”

  1. re: recent call on Greek Bonds..

    “Greek public sector workers went on strike Thursday to protest austerity measures and press the government not to agree to further cuts as it discusses an aid package with the EU and the International Monetary Fund. Doctors, nurses, teachers, tax officials and dockworkers walked out, paralyzing public services. Thousands are expected to march Friday as European and IMF officials meet for the second day of talks that could lead to a financial bailout for Greece. Workers are protesting public wage cuts, a pensions freeze and tax hikes to try to pull Greece out of a fiscal crisis that has shaken markets worldwide and driven Greece’s borrowing costs to a 12-year high. Many in Greece fear strings attached to a $60 billion aid package will hit living standards in a country where one person in five lives below the poverty level…

    something about “Blood from Stones” comes to mind..