Some more on the second biggest piece of Euro-news from yesterday. After Austria surprisingly announced it would delay its contribution to the Greece bailout fund until such time as Greece actually stopped lying and did what it had promised (i.e., never), it seems that more of the Eurozone is starting to get cold feet over how to proceed with this classical defection from a game theory set up. As a result, the entire EU has delayed the December tranche of the Greek payment until January. Presumably this is to teach Greece a lesson, although it is unclear what it will actually end up achieving. As Greece can not fund itself outside of the ECB framework, as its banks are insolvent, and as it does not have the capital to exist in isolation, this action is comparable to the EU pointing a gun at its head and telling itself it has to stop lying or else. Yet with the entire continent subsisting on nothing but lies, this is nothing but a pure exercise in surreal tragicomedy - yesterday's question to Ollie Rehn during the EU press conference by a WSJ reporter about how the Stress Tests confirmed all is good with Austrian banks, and how he would comment on this, which was followed by an awkward silence, captures it perfectly.
Adding to peripheral unease and pushing German Bund futures up half a point at one stage, Austria said December EU payments to Greece would be postponed until January after euro zone finance ministers told Athens on Tuesday to cut its spending more.
"It's illustrative of the divisions in, and the inherent weakness of, the euro zone due to the policy makers' priorities ultimately being domestic rather than for the common good of the euro zone," said Credit Agricole strategist Peter Chatwell.
Ireland pledged to work with a EU-International Monetary Fund mission on steps to help a stricken banking sector -- a process that could lead to a bailout which Dublin has so far baulked at asking for .
"While there remains uncertainty over this, it doesn't look good for the peripheral markets," said Nomura rate strategist Sean Maloney.
And here are some pretty charts from Reuters.