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Blinkmanship – Greek style

Published Thursday, June 11th, 2015

The Greek debt crisis continues to dominate headlines as the now familiar practice of European officials snubbing revised proposals put forward by Athens and the seemingly obligatory round of inconclusive talks played itself out once again. Frustration at the lack of progress prompted Standard and Poor’s to downgrade Greece’s credit rating as it warned of a looming default following its recent decision to prioritise domestic spending needs over debt obligations. Lingering anxieties were not helped by a fresh bout of bond-market volatility where 10-year Bund yields topped 1% for the first time since last September and equivalent Treasuries tested a seven-month high of 2.5% ahead of key US retail and consumer data. With sentiment already on the back foot, the World Bank chose a bad time to release its biannual Global Economic Prospects report in with it trimmed its 2015 global growth forecast to 2.8% from a previous estimate of 3%.

We were warned long ago that Yanis Varoufakis considers himself an expert in game theory aka to the man in the street as blinkmanship. Whether he is running rings around the European Commission or himself and his Syriza colleagues we will soon discover. Depending on the journalist you last read you can feel deeply pessimistic or marginally optimistic about an agreement being reached. Anything more is unrealistic. One certain outcome is that it will be messy whether an agreement is reached or not. The Greek negotiating position has come down to claiming that if Greece is forced to default “it would be the beginning of the end of the eurozone”. In short the marriage is awful but divorce even worse, you have been warned, so dump us if you dare.

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Posted by Stephen Brennock

Stephen Brennock joined PVM in 2013 after having worked as a project manager for a business development firm. He graduated with a degree in Business Management in 2007.