The Big Picture - Macro Perspective on the Capital Markets, Economy, Technology, and Digital Media

With short term US$ funding concerns temporarily set aside for European banks, all eyes remain on Greece and the Parliamentary votes endorsing a super sized EFSF. Austria’s Finance Minister said they will decide on Oct 3rd whether Greece will get their next round of money on Oct 14. It seems that they will as EU/IMF officials continue to say that as long as Greece is implementing their reforms, money will continue to flow to them. There still seems to be though a complete lack of acknowledgement on the part of most European officials that Greece’s finances cannot survive under its current balance sheet and that reforming their economy can only succeed with an extinguishment of part of their debt load. Is it fear of change and its consequences or delusion? I guess a bit of both. Following thru from yesterday’s gains, the debt of Greece, Italy, Spain and others are rallying and iTraxx financial 5 yr CDS is at a 2 week low. After falling 17 bps yesterday, the euro basis swap is wider by 4 bps. The 3 mo euribor/OIS spread is at a 2 week low. In Asia, the Reserve Bank of India continued its fight against inflation by raising rates by 25 bps, mostly as expected.