Greek PR Smackdown - Goldman's Eric Nielsen Edition (Again)

Erik Nielsen must have gotten quite a beat down from the Goldman Greek PR corps. Earlier, as we disclosed, the firm's European strategist, suggested that something nasty this way comes courtesy of an emergency ECB meeting. Later, he backtracked not only on that statement, but also on all the media hoopla over the country with the inverted curve, saying (independent) media is now the functional equivalent of CDS traders - vile, smelly, scheming bastards. Amusingly, this is very much reminiscent to Erik faux pas in early February when he had the temerity to point out (rightfully so) that the Greek GDP deficit is actually 16%, not 12.2% as was widely believed (and with every passing week it is becoming clear that Nielsen was completely right, as 2009 GDP is now at 12.9%, and probably will be 14% in another month, yet post another smack down had to reissue his note saying it was all his fault for stirring the speculative elements). Too bad Erik does his best to report the truth as he sees it, only to receive the prop desk's Greek trading axis after the fact, which today apparently was in direct opposition with his earlier bearish tone.

First follow up note today:

EU agreement on Greece... markets are getting unnecessarily excited   

News on the wire says that EU officials have reached an agreement today on the details of a package for Greece – it'll be a single "one-stop shop" between the other 15 Eurozone members, the EU's institutions, and the IMF.  So, it says “if Athens wants to tap the €20-25-billion fund, it will have to apply to both the EU and the IMF jointly. The EU's share of the finance will take the form of bilateral loans at a rate higher than that of the IMF but well below those prevailing in the market”.

In apparent reaction, Greek spreads are substantially tighter and the euro stronger.

In my opinion, this is a whole load of nothing, with the possible exception that the funding cost will be “higher than the IMF and below the prevailing market rate” – but I am not sure how much information there is in that – and I don't understand how “a below market level” can be called “non-concessional” and “encouraging a return to the market”, as the EU leaders declared.  Lest see on that one.

Apart from that, we knew that the Commission would be coordinating the bilateral loans (that’s in the treaty!) and the fact that it’s a “one-stop shop” where Greece would approach the EU and the IMF jointly is really not that surprising; after all a EU member has to first talk to the Commission before applying to the IMF, so … what’s the news?

But I am relieved to learn that “EU officials” have met to talk about Greece and agreed to coordinate.  Meanwhile, the key IMF guys remain in Washington.

Second, and last, follow up note:

Last thing from me today on ECB/Greece - promise (I hope)

I have now spoken with a number of people with traditionally good assessment of these situations, and I am starting to think that the ECB GC meeting tonight most likely is a simple update (by Papademos to the rest of the GC) of today’s meeting of Eurozone min fin and central bank deputies – to get them all up to speed before next week’s Ecofin, where the final agreement on European terms are likely to be hammered out (which will largely be an issue of what a non-concessional interest rate means in concrete terms.)

Yes, a simple update in which the fat bureaucrats will hobnob, discussing Wittgenstein over a game of backgammon while sipping chilled Gewurztraminer. They may even say some lovely things about the mother of the Fitch analyst who had the grace of downgrading Greece from BBB + to BBB -...

Comments

[Teaser]

Bizarre

[Miles Kendig]

Who hung him out to dry?

[Buck Johnson]

I know, someone did hung him out to dry.  It seems the only leader who has been keeping the same story has been Andrea Merkle.  She wants the interest rates at 6%.  This meeting has to do about Greece and I think something will be said or done by the opening of the markets on Sunday/monday.  With the downgrading of Greece's debt, it's not helping to keep this game going of speeches and announcements from the EU saying it's a deal or a done deal or whatever.  It's a bunch of representatives that have played chicken with the speculators and the speculators have figured out that the rest of the EU maybe creating a firewall to protect themselves from Greece.  And how that goes they may do the same to the other PIIGS.

[sweet ebony diamond]

angela merkel knows what she is doing.