Sunday, November 06, 2011

2012, here we come.... (#28)

Let's pause to calibrate our sense of doom and gloom by checking out some of the latest thinking from the pessimist platoon's point man. It seems that Dr Death likes to invite people back to his pad for wine, canapés and talk of creeping cataclysm.

It's a funny old thing this 'slow motion train wreck'. It looks a bit more to me like a set of nested train wrecks all playing out at slightly different frame rates. Indeed, some of them are periodically on freeze frame, almost tempting one to imagine that they might stay that way for long enough for most of the passengers to exit unharmed, or somehow even snap into reverse.

Greek politics seem resistant to all efforts at containment. If the Greeks themselves should have been offered the chance to vote on their own rescue package, then there are surely quite a few non-Greeks who probably feel they should have had in on the Papandreou confidence vote. The Greek PM managed to survive that process, albeit with a large knife in the back courtesy of his Finance Minister, but his plan of forming a coalition government of 'national unity' looks unpromising this weekend, given the continuing absence of the main opposition party.

Yet perhaps the more intriguing train wreck right now is Italy. The Euro denominated BTP/bund spread separating Italy from Germany is at a record high. The Italian Central Bank claims that Italy is solvent so long as it doesn't have to pay more than 8%. We're at 6.6% and counting. Last week, at a joint press conference, when Merkozy was asked if Berlusconi had been able to reassure them, they looked at each other and burst out laughing.

Meanwhile, the Italian PM has been bragging that Italy turned down the option of a low interest loan from the IMF.

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