Thus reads today's headline in the DT business section. Not exactly what the EU wanted to hear but a rate they quote on Greek 10 year bonds of 9.39% is higher than before the Euro bonds hit the market and Greeks were trading on convergence trades. Dr Frau Merkel has pledged support for the aid package for the sake of Euro stability but said it was contingent on certain conditions being met. Not what the market wanted to hear. It wanted a clean done deal which this certainly is not!
The Greeks have satisfied the EU that it has done enough to cut its budget deficit by around 4% of GDP in 2010 but what comes after that? That is what the Germans and the market wants to know. As Barclays Capital put it this is 'a marathon not a sprint'. The proposed €45bn package is only enough for one year. At least that much again will be needed to cover subsequent years. Meantime fear of contagion stalks the market with Portuguese CDS at record highs yesterday.
Meanwhile Reuters reports the ECB is still blaming speculators. The measures taken by Greece to cut its budget deficit this year are "convincing and encouraging," but it has not been helped by market speculators and poor communication, European Central Bank Governing Council member Yves Mersch said in a Belgian newspaper yesterday. M Mersch then went on to say, "Unfortunately, the scope of this effort has suffered from a communication that I would not describe as optimal, neither from Greece nor from Europe. Markets have been disrupted by indiscriminate declarations at all levels. This is a lesson in what not to do."
Well I would second that but that is how things happen in the tower of Babel that is the EU.