Wednesday, 14 January 2009

Timeo Danae: Not

We've had a fun little back and forth with some Greek MEPs over the last couple of days. Yesterday Nigel makes a speech in the Strasbourg Parliament which points out that the Greek bonds have a spread of 233 basis points over the German Bund (no, don't worry, you don't need to know all of this financial terminology. Essentially, the Greek Government has to pay a lot more to borrow money that the German one does because the markets think they're a dodgy bunch....).

Then the Greek MEPs allied with the EPP (ie, sitting with David Cameron's bods) send around an email which says this:

Following today's attempt by Mr Farage to attack the EURO through provocative statements on Greece's membership to the EMU -during the plenary debate on the 10th anniversary of the EURO-, the Greek EPP-ED Delegation (Nea Demokratia) would like to inform you that today's tender of government bonds yielded a total amount of 2,550 billion Euros at an average rate of 2,51%, well below the Euribor rate of reference. The final result covers more than 6 times the amount targeted by the Greek government.

This offers a tangible response to any Member seeking to establish the truth regarding the credibility of Greece's performance as a trustworthy member of the Eurozone.

Mr Farage was really unlucky to attack Greece on the same day that markets proved their confidence to the Greek economy.

Ohh, get that eh? They'll be scratching our eyes out next.

(Boring technical stuff. Skip this unless you like details. Actually, the Greek government didn't issue bonds. They issued bills. Bonds are for more than a year, bills for less than one. Also, they didn't get "below Euribor". Euribor was 2.19% yesterday for 360 day bills. The Greeks paid 2.67%. This is known in financial circles as "more" than, not "less than" or "well below". The implication of this is that the markets think that the Greek government is a worse risk than your common or garden bank.)

But what is really delightful is that today S&P cut their credit rating for Greece.

This is, to use again that impenetrable jargon of the financial markets, evidence that the markets do not have confidence in the Greek economy, not proof that they do.

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