Goldman’s Erik Nielsen Filters Out The Greek Background Noise
Courtesy of Tyler Durden
Goldman’s Chief European strategist is starting to sound less and less confident that all shall be well. The same can not be said for his ebullient (and still employed) colleague Jim O’Neill, whose answer to everything is “BRIC.” Anyway, here are Erik Nielsen’s latest (and increasingly more skeptical) summary views on the Greek bailout. By the way, the IMF shotgun approach to “helping” any and every member country is to peg its currency to something and establishing a currency board. The IMF simply does not know how to do anything else. So how the hell can the IMF operate in the context of a monetary union?
You’ll hear a lot more about this during the next week or so:
Following the news that Germany, the Netherlands and Finland have put the IMF back on the table as a possible source of financing for Greece – and PM Papandreou’s statement yesterday that the European summit on Thursday-Friday is the deadline for Europe to come up with help that will immediately reduce Greece’s borrowing costs, otherwise he’ll go to the IMF – has significantly raised the temperature inside the Euro-zone. France and others remain adamantly against involving the IMF, and the IMF themselves said yesterday that they have not been approached by Greece, but that they stand ready to help, if asked (as they have to say about any member country.)
My take continues to be that the Europeans will not come up with concrete help next week, but will try once more the trick of telling the market that they stand behind Greece while telling their own taxpayers that they are not on the line. And I doubt that it’ll help a lot, but maybe a little. Greece may then be able to borrow a tad more, but its going to be tough to get the entire EUR10bn or so that they need before May. If they don’t fill the hole, then I continue to think that Europe will help. But the probability of the IMF coming in has clearly increased. Incidentally, the IMF charges about 1.25% on its loans these days! (and my view is that that’s where Greece should go.)
Stay tuned, I’ll keep you posted, but noise, conflicting statements and a dismal display of lack of unity will be the overriding picture out of the Euro-zone at least for the next week.
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