With the G7 having once again pulled off another spectacular impression of a wet sponge, the market is now feeling like Neville Chamberlain declaring "I have in my hand a piece of paper..."
But they are not as naive. So thanks G7, your commitment to solving a problem that unfortunately has time dependency attached to it has left today's markets looking like a work by Hieronymus Bosch.
Observe the French banks in the background of the work providing the back lighting for the rest of the scene as periphery debt holders jump from the cliff (top left) as the battle at the gates of Fortress Europe are fought. The rest of the symbolism is pretty obvious though TMM invite your own observations.
But through TMM's less medieval eyes we see the picture slightly differently and can sum it up as:
- Greece obviously wants to get away with doing as little as it can. Hence, fiscal slippage.
- Germans have foot on Greek neck, and whenever they loosen it, Greeks backslide.
- Germans push their foot down harder on Greece's neck, so Greeks come up with the goods.
- It doesn't make sense for Greece to default when it's running such a large primary deficit, so the Greeks acquiesce when pressure is applied.
- IMF/Germans send the cash.
But with the G7 sailing on by, it looks like the markets are going to be left alone to sort their own problems out rather than counting on any lifebelts being thrown in by the CBs or policy makers in the short term. TMM hope that the need for self help rather than spoon feeding will result in a little more introspection rather than the mad dash from bad headline to bad headline. This morning's news flow really hasn't been that bad as the Europeans do seem to be trying to show a little more unity than usual, and official expectations of the Troika outcome are being flagged as positive. TMM hope that it's worthy of Prokofiev's cheery "Troika" that they can't get out of their minds every time they hear the word. But for today we are back to "price" once again being the news...