Sunday brings Greece’s “D-Day”. Whether the “D” stands for Drachma or “Damn it, we’ll promise to do whatever we have to in order to remain with a currency which is too strong for our economy” will have to be seen.
As we stand, polls have the outcome too close to call but anyone who thinks that with the stoke of a pen Greece will cease to be a total basket case is either stupid or on something for which one used to go to jail.
There are too many numbers being bandied about but I was struck by the headline in the pink’un this morning which suggested that the country will need a further €60 billion over the next three years. How the problems emanating from an unmanageable debt mountain of €380 billion are supposed to be cured by increasing it by another €60 billion escapes me.
Ultimately, though, the creditors will never see their money again. They can then, therefore, either push Greece into default and write it off or write it off in advance and save the country the ignominy of the default. Neither outcome is satisfactory but either of those is in all probability better than just stuffing another load of cash into this seemingly ungrateful, bottomless pit.
Greek economic output has been declining steadily since the beginning of the year. The glass half full brigade will say it’s because of the Syriza administration, the glass half full camp say it is despite them. At this late hour, who cares?
If half as many hard-working Athenians had been out on Syntagma Square 10 years ago to protest against corruption, graft and favouritism as there are now demonstrating against cuts and austerity, then maybe they wouldn’t be where they are today. On the other hand, if it hadn’t been for that very corruption, graft and favouritism, that half quite probably would not have had jobs in the capital in the first place.
That the northern EU powers are significantly guilty of failing to prevent the mess from developing in the first place is unquestioned, but five years ago the Hellenes were handed by them a “Get out of jail free” card which they wasted. Now they think they can “Pay a $10 fine or take a Chance”. Mutti Merkel is no idiot and knows that the eurozone is faced with Hobson’s choice. She is also smart enough to know not to say it.
Fact is, we can’t turn the clock back. Tsipras and Varoufakis knew it was ticking but thought they could attach it to a stick of dynamite which they could elegantly place under the Troika’s chair. It now looks as though the bomb is about to go off in their workshop instead.
The referendum will resolve nothing and probably do nothing more than to add a further layer of uncertainty. Tick-tock, tick-tock……boom!
Payrolls
On a more prosaic note, we got the early release of the US Labor Report for June. It was a mixed bag for although the increase in the non-farm payroll at 223,000 was only a whisker below the consensus forecast of 233,000, the May figure was revised sharply downwards from 280,000 to 254,000. The fly in the ointment, however, was the fall in the participation rate to 62.6% as 432,000 people exited the workforce. That is the lowest since October 1977.
The number is disappointing in as much as the summer is beginning and there is normally a rise in the temporary job sector at this time of the year, driven by hirings in tourism and related sectors. The deeper one drills down into the numbers, the more confusing they get. Stocks barely moved although it is also extremely rare to see Wall Street trade lower – the Dow and the S&P fell, albeit only in decimals – on the day before the July 4 holiday.
The weaker than expected numbers might have the Fed thinking again about September or December – has everyone forgotten that there’s an FOMC meeting on October 28 as well? – so the softish outcome yesterday should logically have had the markets higher. Did I say “logically”. How silly of me. Sorry.
With the Yanks out and the Greeks on their way out, I too shall be out as I return to London for the day to attend what has been termed the Teenage Scribblers’ Lunch. For the benefit of the younger ones out there, the phrase was coined by Lord Lawson when, as Nigel Lawson, he served as Chancellor of the Exchequer from 1983 to 1989 under Margaret Thatcher. He is, incidentally and in case you hadn’t guessed, the father of the Domestic Goddess Nigella. Anyhow, the Treasury was in trouble and Lawson could do nothing better than to blame it all on the financial press which he collectively referred to as the Teenage Scribblers. That he himself had been a journalist with the Spectator, the Sunday Telegraph and the FT was beside the point.
Anyhow, today a number of us, all writers of bits and pieces on bonds and other animals, will meet in London, take wine, compare notes and try to work out from where we gained the skill which permits us to find so many different ways to say the same thing without being found out.
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Alas, it is that time of the week again and all that remains is for me to wish you and yours a happy and peaceful weekend. I shall be attending the local Great Rollright Big Bake where I shall be helping at the bar but also hoping to gain plaudits for the rich English fruit cake I have made with my own hand and entered in the competition. No pressure there. Yep, I love the smell of baking in the morning….
