Sunday, February 19, 2012

Chasing the ball

The Failygraph is finally getting close to the message, courtesy of Bruno Waterfield - despite the Londonisation and the desperate self-importance of this failing rag, needing to find a "secret" report to justify printing that which has been evident from open source material for days - and even weeks.

Despite that, Bruno has managed to convey some of the essence of the situation – that the Germans want Greece out of the euro. For this Bruno relies on Wolfgang Schäuble, the German finance minister. He, as we all know, simply does not believe that any Greek government is able to implement the reforms necessary to restore the country to financial health.

With no more substantive evidence of a split between Merkel and Schäuble than had The Guardian, the paper feels the need to run this meme, and while it has Austria and Finland supporting the German view, the Netherlands doesn't get a look in.

That leaves us with the unsupported Failygraph narrative, where the European Central Bank and the "Eucopean Commission" (sic) are, for now, lining up with Merkel to push for the rescue attempt to continue, "fearful that the financial tsunami that would be unleashed if it failed would swamp the eurozone".

At least the piece is without the rampant Germanophobia that so obscures proper analysis, and which has brought Your Freedom and Ours into the fray, but there is still a great deal of bolt-on reporting here.

So far, the only evidence of a "split" between Merkel and her finance minister is a hare started by the Financial Times based on comments made by unnamed "officials". Clearly, there is tension in the ranks, which means that different factions are going to be briefing against each other, so we need a whole lot more than unattributed comments from the rival gangs.

Oddly enough, when it comes to fears of "a financial tsunami that would be unleashed if it failed would swamp the eurozone", this seems to be old hat. In the Financial Times "Trader's diary", David Schwartz notes there were no meaningful price drops two weeks ago when negotiations between Greece and its lenders were thought to be going down to the wire.

Uncertainty of this type, Schwartz says, might have triggered three-digit price swings just six months ago. And last Tuesday, when the Eurogroup meeting was suddenly cancelled, the FTSE 100 fell just six points. To him, "it is becoming increasingly clear that investors are no longer panicking about a possible default".

With Europe's leaders now publicly berating Greece and repeatedly signalling that there are finite limits to the amount of financial support they are willing to provide, it also appears that EU leaders and UK investors alike are growing more comfortable with the idea of Greece's default and its possible departure from the euro.

Thus, Schwartz concludes, "many observers now expect the country to go bust. It is a question of when, not if. I also suspect that this perception is now firmly factored into UK share prices".

Timing, now, is everything. Monday's meeting may reveal more clues, and we might even get to see a glimpse of that elusive fat lady, waiting in the wings for her final crescendo.