Disaster deferred, not averted

by James Mackintosh

Financial Times
December 15, 2011

In September investors were in a blue funk, deeply fearful that their nightmares were about to come true in Europe. Now cold sweats have given way to mere uneasiness, as the prospects of a eurozone break-up are put back to next year.

Investors are still worried, as this week’s plunge in the euro, shares and safe bond yields – partially reversed yesterday – shows. But even bears admit they cannot see an immediate trigger for another phase of the euro crisis.

Consider a few examples. First, the Greek bond due to mature on Monday is trading at face value for the first time since January last year. Just a month ago its annualised yield was more than 100 per cent. Investors do not expect Greece to default over the weekend.

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