Contemplating my morning porridge - Risk on, risk off


An irritating snip-snip and metallic clicking was coming from a couple of seats away this morning.

An was already tired, as I’d not been able to help myself read the news on my iPad in the middle of night, so transfixed was I by the election result in Greece. Talk about a market geek. Yeah, that’s me. Anyway, I looked over with a slightly curled lip at my neighbour’s attempt at self-manicure, and pondered at the unfairness of life.

You see the simple fact is that the Greeks have had quite enough of the Troika – that’s the ECB, EU and IMF to you and me - imposed austerity measures, and like many European countries with populist and indeed nationalist, parties, they’re voting with their wallets. No sense in looking for economic coherence in Syriza’s plans: they’re just offering relief to the Greek public in the form of renegotiation of debts and a whole package of pretty much unaffordable goodies.

What’s remarkable about the timing of this election and change of direction, is that it comes only a few days after the ECB’s promise to spend some 1.1 trillion Euros between now and September 2016 on Quantative Easing in the form of government bond buying operations.

So one minute the market is all cosy and 'risk on' with this promise of almost unlimited free liquidity, and the next, there is the spectre of months of uncertainty as this new Greek coalition tries to strike a deal with the EU, and the rest of us wait with bated breath to see if they end up leaving the EU altogether. This would raise the possibility of other countries following this 'Grexit', and the almost certain collapse of the Greek economy and of Greece as a remotely viable state. So a clear case of 'risk off'. See how tricky it is to get it right in these straightened times ?

When you hear of Greek families struggling even to feed their children; when you hear mothers stating flatly that their kids have no future, you have to have a some sympathy for their plight. The only way these questions affect us here in London, however, is by the performance or non-performance by a few basis points of various clusters of bonds, or the occasional wobble in the stock market.

The Euro’s 11 year weakness, partly due to QE and partly due to the Greek uncertainty, is more of interest for those of us going on holiday in Europe, than it is as a major macro-economic factor in ECB thinking.

So, as I moodily contemplate my morning porridge, I can’t help thinking that all of this is yet another storm in a teacup compared to the real poverty and hardship there is out there. And my neighbour’s finished doing his nails.

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