International alarm over Greece’s debt crisis abated on Monday when investors flocked to buy the government’s first bond issue of the year, an indication that it may run into less trouble than anticipated in meeting its short-term financing needs.
Investors placed about €20bn ($28bn, £17bn) in orders for the five-year, fixed-rate bond, four times more than the government had reckoned on.
Moody's rating agency, which has downgraded Greece's debt and has a negative outlook on the rating, said the bond sale showed Greece could finance its debts in 2010 but the key for its rating was the ability to implement spending cuts.
Told you so (assuming the Greek government doesn't do anything momentously stupid, this really is a sprint, not a marathon. It's the short-term speculation that Greece needs to address so that there's no need for an EU bailout. Once the vultures move on, everything will be OK again). The reports are from the NY Times and the FT.
Greece only needs to do two things to kill the beast once and for all. Firstly, establish an independent national statistics agency (which should be happening very soon), preferably with some EU officials invited to sit on the board too. And secondly, implement an unexpected, headline shock measure that will stun the speculators: say, raise VAT by 2%, or commit to doing so if the deficit comes in higher than expected.
On a tangential point, Jacoline Vinke, the wife of the Greek finance minister, has a beautiful little website with intimate reviews (and pictures) of small hotels in Greece. UK readers can find one of her books -Around Greece in 80 Stays
- on amazon.co.uk.
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