Greeks vote to stay in euro

By Peter Boockvar - February 13th, 2012, 8:20AM

Knowing that the vote over the weekend in Greece was really a referendum on Euro membership, a majority of the Greek Parliament said yes to staying. European Finance Ministers meet again on Wednesday to solidify the 2nd bailout package for Greece at the same time hopefully a deal is consummated between Greece and its creditors this week. The Greek 14.5b euro bond that matures on March 20th is up by 2 pts. The optimism that all will be completed and contained AGAIN to Greece has yields lower in Portugal, Spain and Italy. The iTraxx Financial Index is also narrower by about 5 bps. However difficult these times are for Greece, there is no way around the shrinking of their public sector to a size their private sector can sustain and putting private sector wages on a competitive playing field with the rest of Europe. From a US stock market perspective, outside of Friday’s worry with Greece, the straight line upward move over the past two months reflected a lack of concern that a deal wouldn’t happen and today we’ll get to see what’s been priced in with Greece.

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Category: MacroNotes.

Comments

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data, ability to repeat discredited memes, and lack of respect for scientific knowledge. Also, be sure to create straw men and argue against things I have neither said nor even implied. Any irrelevancies you can mention will also be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

3 Responses to “Greeks vote to stay in euro”

theexpertisin Says:
February 13th, 2012 at 9:00 am
This vote isn’t worth a bucket of spit.

The Greeks voted themselves a prescription to get out of the hole. Problem is, they’ll never take the prescription.
johnhaskell Says:
February 13th, 2012 at 10:31 am
1. No, the Greeks did not vote themselves a prescription to get out of this hole, because they are still in the Euro.
2. Remember, the Euro was supposed to bring benefits to its membership, not riots. Some non-Greeks forget this from time to time.
GeorgeBurnsWasRight Says:
February 13th, 2012 at 11:48 am
The other problem is the prescription is unlikely to get Greece out of the hole.

There’s only 3 ways to get out of a debt hole:
1- Increase your income to the point you can pay off your debts. If you’re a nation, this requires a growing GDP in addition to a shrinking deficit. Neither are likely to occur with the “prescription”.
2- Let inflation shrink your payments to a manageable level. Problem is there’s little inflation, plus Greece’s debt isn’t fixed rate long term.
3- Default.

Only #3 has a chance of working, painful though it would be. But if the other two can’t work, the only other alternative is what must eventually happen.