Greek Fire

So the “right party” wins the election in Greece supporting the bail out.  Good news? No, not really. The ECB and European (aka German) policies on Greece are doomed to fail. I tweeted this morning that all I don’t see any good news, but I can small straws burning. Those are the straws that are being clutched by desperate Euro-area politicians and policy makers.

I here more and more credible stories of major companies sweeping their cash from Greek banks every single night. Regulators are asking for stress tests against any number of catastrophic scenarios that are waiting to happen. If it’s not a dead certainty now, it’s pretty close.

Look at the response of Spanish bond yields to the “good news story”. Those with money know that the UK and the US aren’t going to default any time soon, aren’t going to suffer hyperinflation any time soon and that Spain and Greece are approaching the brink.

Spanish bond yields leave 7% behind them
Spanish bond yields are rising to new highs all the time as the size and extent of the problem in Europe is better appreciated, as the current policies are shown to be failing completely

No gold-standard Austerian, Austrian mania explains any of this.

Published by David Kirk

The opinions expressed on this site are those of the author and other commenters and are not necessarily those of his employer or any other organisation. David Kirk runs Milliman’s actuarial consulting practice in Africa. He is an actuary and is the creator of New Business Margin on Revenue. He specialises in risk and capital management, regulatory change and insurance strategy . He also has extensive experience in embedded value reporting, insurance-related IFRS and share option valuation.