Grexit

I still don't think it's going to happen. The EU lenders have too much to lose and will cave in. They'll have to. After all it's their money that's going to be lost. 

I believe the only possible reason the creditors have not already caved is that they have seriously underestimated the views of the Greek people. The Troika believe it is not rational for the Greeks to default and this be thrown out of the Euro and the EU. But most of the Greek people have nothing to lose. Youth unemployment is over 40%, pensions are being slashed, asset prices are collapsing and the economy is back in recession. For most Greeks they may not want to leave the EU, but the never-ending pain required to stay in simply is not worth it. As has been pointed out frequently over the ages, there are few things more dangerous than a man who has nothing to lose. The Greeks are not going to blink first.

Just like the good old days

There's talk of an emergency EU summit over the weekend to sort out the Greece "crisis". Meantime equities and bonds a all over the place.

It reminds of the good old days of 2008 when everyone had to square positions on a Friday night because who knew what firms or countries would fail or be rescued over the weekend.

Those were the days.....

Switzerland

The hills are alive with the sound of falling prices.....  http://on.ft.com/1FigXXj

The only surprise to me is the increase in retail sales. I don't know who it is that's buying stuff here but it certainly isn't anyone I know. Pretty much every person down here close to Lac Leman does at least some or all of their shopping in France, and some even drive all the way to Germany to do it (the Germans are much more organised at paying back tax than the French - surprise, surprise). Up in Zurich it's apparently the same. The major supermarket's car parks across the border are full of Swiss registered cars. Even Swiss-made products are cheaper in Euros. 

Over a barrel

That's where the rest of the Eurozone has suddenly realised it is being held by Greece. Everyone seems to have assumed that Greece was the one with the weak hand. How? Why? Greece has all the cards. If they default then it is the EU, the IMF and the ECB who will bear the losses. If they break up EMU then it is the rest of Eurozone that will suddenly be vulnerable. There are plenty of other Europeans who question the Euro - Grexit would embolden them. And they're not fringe players. Marine Le Pen is currently leading polls for the next French presidential election remember.

Greece has now said 5 June is the day they will default, when they fail to pay €300mm to the IMF. They can legitimately claim they have been trying to act in good faith, raiding every piggy bank they can find to pay the bills up to now. But those piggy banks are now empty. Either Europe relents, or Greece defaults and screws them for every penny they've lent so far.

My money's on a sudden solution appearing.

Russian dolls

Russias's gross GDP numbers are going to be like Russian dolls for a while - each one a little smaller than the previous one.

The US's tactics work. Excluding Russia from capital markets will slowly ratchet up the pressure on the Kremlin. Putin's desperate attempts to talk up the economy for local media consumption a couple of days ago were simply that - desperate. He's screwed and he knows it. The problem is that as he gets more desperate he is likely to view further provocations and expansionist moves as the best way to shore up his popularity at home. Baltic states beware. 

Russia. Finally someone spots the obvious

There's been lots of talk of Russia bailing out Greece and in return Greece vetoing EU sanctions on their new paymaster.

Finally someone spots the flaw in this plan

"There's no doubt the Russians could provide small amounts of financial support, but they're not in a position to give the kind of money Greece needs to stay in the eurozone," says Simon Tilford, deputy director of the Centre for European Reform. "The amounts involved are far beyond the scope of Moscow, whose economy is not much bigger than the Netherlands."

And of course Russia is in a deep recession so it's only going to get worse for the foreseeable future. 

Greece and the Euro.

A 4 month reprieve has been bought but don't think it's over. Greece really has the EU over a barrel. If they walk away from their debts and the Euro it calls into question the whole European project and will boost the other anti-EU / Euro / austerity parties around Europe.

Since it was first proposed in the mid 90s, I've always said that the Euro would happen and survive irrespective of economics, logic and finances as long as the politicians wanted it to survive. So far that has always been the case - everyone knew that most countries didn't qualify for the Euro at its launch by the rules set out but they all got in anyway.

For the first time though there is a question mark over its survival as suddenly there are politicians flirting with power who are openly and actively anti-Euro.

The "big powers" can't let Greece go for fear of it being the first card in a house made of them. Greece has more power than many are giving them credit for.