Financial Times
February 21, 2012
There was a certain inevitability about the Greek bail-out deal struck in the early hours of Tuesday morning in Brussels. The negotiators clearly decided to stick to coffee for themselves, and bread and water for the Greeks, rather than reaching for bottles of Mort Subite [Sudden Death], a Belgian beer worthy of its name. When the brinkmen get so close to the edge, as they did last week, they rarely jump.
There were some surprises, though. The unfortunate banks were asked to undergo yet another short back and sides. The central banks have agreed to disgorge some profits, to support lower rates for Greece. And some other creative accounting measures have brought the projected level of debt to GDP down to within a whisker of the magic 120 per cent number.
On Tuesday morning the markets opened as usual and begun to trade. But the notion that the day’s trading will be a meaningful verdict on the deal is fanciful, because we are now in territory where the markets have no particular wisdom. They cannot begin to answer the three outstanding questions, which will determine whether this latest deal is a turning point, or yet another false dawn on the slippery slope to default and “Grexit”, an ugly but vivid term coined by Willem Buiter of Citigroup.
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