12th February 2012: Germany Versus Greece: What Does The “U” Stand For In EU?

Quote of the Day:

The law must be passed by midnight because come Monday morning, the banking and financial markets must have got the message that Greece can and wants to survive.

Evangelos Venizelos – Greek Finance Minister

Macro Overview

Greece Versus Germany

• Hundreds of thousands of protestors take to the streets brandishing Molotov Cocktails. It could be a scene from a bad day in Syria but it isn’t… if you want the definition of fiscal brinkmanship, if you want a summary of all that is flawed with the Eurozone, look no further than Athens, Greece.
• Reuters reports that the Greeks are rising (rising to boiling point, that is). Bloomberg reports “Athens in Flames” as Greek parliament gets ready to vote on an agreement to plunge the austerity knife deeper into the midriff of the Greek workers. RT news make a lot of the fact that the youth contingent is high. You know the score with this dear reader high youth unemployment and supra-nationally forced austerity is an explosive mixture. Only a week ago I drew reference to the number of unemployed under 25 years old in Greece (50%!).
• What is interesting about this is that The Greek Government are just a proxy for EU economic policy, a medium for the conflict, if you like. When you read between the lines, actually, the fiercest conflict is actually between the Greek public and the German elite. The Greek government and the German public opinion appear to be somewhat of a sideshow to the main drama and it’s becoming quite clear that the Greeks see through this “technocratic” government as effectively EU puppets.
• Almost all the assertive political rhetoric is coming from Berlin. It is becoming clear now where Germany’s path is diverging from idyllic (naïve?) suggestions I have made in the past – I forgot that there was politics involved, which means unfortunately there is constant opportunity for politicians on all sides to power grab. In the case of the German elite, this gives the impression that part of the motivation towards playing hard-ball with the Greeks is to cement their political dominance within the Eurozone. If this is indeed the case (and I may be wide of the mark by some distance here) it begs one to ask what the “U” now stands for in “EU”; it is European Union or European Unilateralism?

Sovereign Debt Calendar

• I was going to stop the Sovereign Debt Calendar, but Greece has made it relevant again. So I’ll keep it up … for now. See Chart of the Day.

Market Overview

Risk Off

• Not a great day for risk assets – Friday was definitely a “Risk Off” day and judging by the way momentum is picking up in Athens we could have a volatile week in front of us. Pretty much every major index in the World was down and it was hard to find stocks that did not take a beatin’.

Chart of the Day

Sovereign Debt Auction Calendar - Weekly

 

Events

Macro Events:

Update:

• Nothing Significant

Alerts:

• Japan GDP

 

Corporate Events:

Results:

• Deutsche Boerse [DB1 GR],

Dividends:

• Du Pont [DD],  Eli Lilly [LLY], Target [TGT],

Reading, Links:

Nothing Significant.