It might seem a bit redundant to revisit European partisan Kool-Aid consumption after our posts of the past two weeks. Yet, there is another development outside of the previously explored persistent weakness of the Greek economy and seemingly intractable nature of its debt dilemma: the process and proposed solution to rescue Italian banks. And the weakest is the poster child for the problems not only to date, yet also how the proposed "solution" might backfire.
That is the return of the Greek Debt Dilemma. Yep, it’s baaaaack! And the same sort of lack of consensus on the most critical steps to finally address it remain the same. After all of these years it would be reasonable to think the IMF and the EU powers-that-be might have resolved their differences on the need for more extensive Greek debt relief.
World stock markets rose on Tuesday, helped by solid corporate earnings in Europe, progress on Greek debt talks, and a new pledge by Japan that it was prepared to weaken its currency. The MSCI All-Country World index climbed 0.4%, the pan-European FTSEurofirst 300 index advanced 1.3 percent, while the MSCI Emerging Market indexalso edged higher.
Like their counterparts in Europe, U.S. indices are expected to start the final trading session of the week in the red as earnings season continues to underwhelm on both continents and the economic data doesn’t give much to be happier about.
The reinstatement of a waiver to allow Greek banks to swap the country's government bonds for ultra-cheap European Central Bank funding is under consideration, Greece's deputy central bank governor said on Wednesday.