As I said last week, the meeting between Angela, Nicolas and George (Germany, France and Greece) did not solve anything. This morning as you are slowly making your way into the office the Asian equity markets are falling, the USD is again strengthening against its nemesis the EUR and commodities are increasing. So far those are all interpretation that Mr. Market sees a default in the case of Greece, Bloomberg. I am not sure this interpretation is correct. Mr. Market neither does see default nor does he want it for Greece. All he cares is about more almost free liquidity into the market. In the end Mr. Market is not about morals or politics is about profits. Everything is just a show to secure more money from governments int order to finance very cheap the next trade, irrespective if that trade is a foreign exchange one or a buying of equities or even of government bonds.
Interesting and somewhat worrisome is the number of discussions at the EU level about default in Greece. I mentioned this last week but it is worth mentioning again as during the week-end few other voices have been heard, mainly from Germany. Even more interesting is increasing number of voices from US that are urging EUROPE to put its house in order. The latest is Larry Summers In FT. A good article with one of the best introduction I have seen in lately (the changed to bold that sentence):
“In his celebrated essay The Quagmire Myth and the Stalemate Machine, published in 1972, Daniel Ellsberg drew out the lesson regarding the Vietnam war that came out of the 8,000 pages of the Pentagon Papers, which he had secretly copied a few years earlier. It was simply this: policymakers acted without illusion. At every juncture they made the minimum commitments necessary to avoid imminent disaster – offering optimistic rhetoric, but never taking the steps that even they believed could offer the prospect of decisive victory. They were tragically caught in a kind of no-man’s-land – unable to reverse a course to which they had committed so much, but also unable to generate the political will to take forward steps that gave any realistic prospect of success. Ultimately, after years of needless suffering, their policy collapsed around them.”
<a href="http://www.reuters.com/resources_v2/flash/video_embed.swf?videoId=221614838&edition=BETAUS” target=”_blank”>Here is a summary of what you should expect this week.
And finally loss is up to USD 2.3 billion in the case of the latest victim of poor Corporate Governance, lack of internal oversight, wrong incentives and maybe crooked bosses.