The old WWII time greeting to soldiers on being taken prisoner was used brilliantly by a DT sub editor in Simon Heffer's Saturday article that covers much the same ground as I have in this blog. Dr Frau Merkel has been captured by the 'crats.
There is now a clearly perceived, huge, downside domestic political risk to Merkel from the proposed EU Greek rescue package. Heffer uses the phrase 'political suicide' for Merkel that I completely agree with. He also adds ,'the certainty that it will not be the last of Europe's banana Republics to pass round the hat and expect it to be filled with German gold.'
The IMF already have a team in Athens and J-C Trichet, the ECB chief, has said ECB 'experts will arrive in Greece next week to negotiate a rescue for the embattled country'. Oh to be in Athens now that Spring, the IMF and the ECB are there!
Meanwhile in the markets Greece's proposed US bond offering of $10 bn has been given the thumbs down by the Yanks and would have to be scaled back to $2 bn to have a chance of success and even that might be cancelled.
The BBC report today, Sunday, that the Greeks will make a formal request this week to the EU/ECB for aid but resistance to this is clearly growing within the EU. Add in the uncertainty about the Goldman's fraud allegation by the SEC the knowledge that in the words of the great Warren buffet, there is never just one cockroach in the kitchen so other investment banks may be charged as well. When you have that to handle why give yourself more problems through buying dodgy sovereign debt? As a bank you can do very well on a risk free carry trade buying AAA sovereign credits yielding 3% plus and financing that at repo rates of less than 0.5%. Its a no-brainer. Jeremy Warner in Saturday's DT notes that equities are soaring as cash is cheap or alternatively as Tim Congdon notes insurance companies can invest their hoarded cash in equities at a better return. Its the same argument. Cash is expensive to hold now so buy something better value.
The Icelandic volcanic ash cloud is the icing on the cake. If it continues the Greek and every other club Med tourist trade economy will collapse. No charter flights means no tourists means economic and political meltdown. I declare an interest that we are due to go to Corfu in early May but if the volcano continues belching out enough smoke to rival Nigel Farage outside a Buckingham pub then only the oligarchs on their yachts will be there.
The UK CPI and RPI inflation figures are due out this week and I expect them to have risen. For those wealthy UKIP MEPs reading this blog I advise buying RPI index linked National Savings certificates They are tax free and an excellent low risk investment for the rich.