Portugal’s Ronaldo gets sponged in the stocks, the Spanish squad could organise a round of pin the tail on the donkey (or, maybe just Fernando Torres) and, hey, perhaps we can get Italy’s Mario Balotelli to don that Santa Claus outfit again and hand out some more cash gifts.
No? Well, beyond further bailouts the powers that be certainly seem to be running out of serious options. As Moody’s slashes Spain’s credit rating faster than its football team slices through an opposition’s defence, the country’s 10-year bonds have today soared past the 7% yield mark prompting further insecurity.
An early exit
For Greece, there’s an untimely exit on the way, but which will it leave first the eurozone or Euro 2012? Okay, I’m being facetious though, as Shamik Dhar, head of investment strategy at Aviva Investors, puts it, the Greek election this weekend may prove to be a “defining moment” for the whole continent.
“In our opinion, a radical, decisive response from policy makers offers the best chance for an optimal outcome to a Greek exit,” he says.
Dhar proposes that an existing firewall of more than €500bn is bolstered to around €800bn and is deployed to stabilise markets.
“At the same time the European Central Bank (ECB) announces LTRO 3, under which it commits unlimited funding for peripheral European banks. In addition, the ECB announces a programme to buy peripheral sovereign debt at target yields in unlimited quantities.”
Lovers of the beautiful game were surprised by Greece when against all odds its team won Euro 2004. As joyous an occasion is sadly not going to come for its economy but Thanos Papasawas, fixed income & currencies strategist at Investec Asset Management, suggests an exit from the eurozone would not necessarily be disastrous for the whole union, as long as France and Germany remain united and committed.
New growth pact
He expects a compromise between Elysee and Berlin after President Hollande wins the second round of the French legislative elections: “This will entail maintaining the existing fiscal pact intact, albeit with some flexibility on the target dates, but with a new growth pact alongside it. I expect some guarantee of deposits in national euro zone banks, an increase in the capital of the European Investment Bank as well as issuance of infrastructure bonds.”
Of course, it’s very easy for us Brits to harangue and criticise though, like our team in Ukraine, our economy too is hardly in rude health. In common with the UK Government’s austerity measures, England’s footballers have been accused of masking their inefficiencies with an overly cautious approach that, when push comes to shove, is overshadowed by German superiority.
