The Greek Parliament approved the Euro 13+ billion austerity package late last night but with considerable pain. The vote was 153-147 with a number of ministers in the ruling coalition voting against the plan who were then promptly thrown out of the ruling body. The result was predicted but not the blood spilt...in the chamber that is; no one seems to care much what was going on with the thousands of rioters outside. Well perhaps that is too harsh but there is another vote on Sunday as to the complete budget and while the predictions for this are also for it's passage, the events of the past few days makes this one more iffy. Following the vote it was announced this morning that the unemployed rate for those under 25 was 58% and overall 26%. That is truly quite astounding and clearly dangerous. Given numbers like this and the dissent in the ranks it is hard to imagine this coalition hanging together for very long and if it falls a new election will surely bring into governance the parties on the far left. Game, set, match at that point. Sunday is going to be interesting. Nevertheless, the Greeks will get there money by hook or by crook and thereby avoid default later in the month.
While this little drama was being played out, Angie and David had a lovely dinner at No. 10 and Angie told David that Europe without the UK was unthinkable. Right, says David, you lot forget about an extra billion for the fat cats in Brussels and about that universal financial governance, you can have it if we have a veto and we stay. Whether dessert was served before Angie's departure remains unreported. To be remembered: the Brits HATE Brussels as well as those who there reside. Apparently, in honor of his guest the PM commissioned a poll, revealed this morning, that had 49% of all Brits ready to leave the EU NOW! What a host! I'm beginning to think this thing is real. At the same time the Old Lady and the ECB announced that they were holding rates steady which for the UK means QE is pretty much over. Sr. Draghi also made it clear today that he was pretty much done talking about Greece and Spain, for as far as he is concerned it is now purely a political matter.
In that regard, Spain had a pretty good auction today across the maturity spectrum even selling about 700 million in 20 year...at a yield of around 7%. I would call that fulfilling a special request and in these times it's good to keep your friends even at the 7% level. Next stop, Greece on Sunday.
Everyone was quiet over here as the markets began to digest the results of the election. The talk all centered around what compromises will be made and by who to avoid fiscal catastrophe come January 1, but not many answers were given. The equity markets sold off big time again which makes me believe, although as I keep saying I know nothing about equities that this is turning into what amounts to a major repricing of risk to the upside. Not good. The Suit is gone at the end of the year and if he is smart, The Leader will announce his new choice for Secretary of the Treasury sooner rather than later. It would appear that the People's Choice is Erskin Bowles which IMHO would work. If he chooses one of the inner circle...well, just let's say I wouldn't be long much of anything. Next week I hope.
I'm off tomorrow to do some pro bono lecturing in the am and unless there is something REALLY important I'm taking tomorrow off and resting up for a big weekend of college football, noon to midnight on Saturday.
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