Greek debt will remain volatile until Athens takes financial support from the EU or IMF, according to Stephen Drew.
Thames River's head of global credit, says Greece tackling its debt position in a piecemeal fashion will see its sovereigns undergo volatility throughout the first half of this year.
Drew says: "Greece really has to get some closure to this, which is accepting they need financial support, which means an EU- or IMF-led bailout plan.
"Greece's current fiscal austerity packages are a plaster solution, but it is not the medicine. Volatility will subside for a month then it will recommence."
German chancellor Angela Merkel yesterday suggested one cure for the volatility of Greece's debt includes banning speculation on it via contracts for difference, which pay their holders when credit events such as bond defaults occur.
French counterpart Nicolas Sarkozy has backed curbs on CDS speculation, as has Jose Manuel Barroso, EC president.
Hedge funds have been widely blamed lately for causing recent volatility in bond and CDS markets.
On UK news program Newsnight last night, European Socialist Party president Poul Nyrup Rasmussen, who backs tighter regulation of Europe's hedge funds generally, attacked Hugh Hendry, founder of hedge fund Eclectica Asset Management, over his industry.
Rasmussen said: "Hedge fund managers should not decide on how a country like Greece or Spain or Portugal should solve its own economic problems."
Hendry countered Greece had been "found cheating and has not met its international requirements and has caused great consternation and anger in those other countries in Europe which have made sacrifices.
"I am trying to save us putting more money into this black hole. I am the guard dog of the capitalist system, who can stand up and say 'the emperor has no clothes'.
"I am the only member in our society that can stand up to [politicians] and challenge them and say to these incredibly important people, 'you are wrong'. That scares them."
The man for the job
Nor sure if Hendry is the man for the job but we the people need someone to keep a critical eye on our continually less accountable, increasingly self serving elected leaders who spend our money in our name. If they are being economic with the actuality (as the late Allan Clarke would have put it) about what state their state is in it needs to be flushed out, or we will all end up paying a larger price somewhere down the line. That is all accept our elected leaders who will no doubt insulate themselves from the costs.
On the other hand it dose not help when other sectors of the F.S. industry are allegedly helping states get around constraints that are in place to keep the politicians honest.
Posted by: Stuart Rathbone
10 Mar 2010 | 13:23
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