In an interview with Bloomberg's Tom Keene, Richard Clarida of PIMCO has pretty much sealed the fate of Greece: "I don’t think that [7%] would be an attractive enough yield. Greece is sort of like the Titanic. Eighteen things went wrong, and when they go wrong at once it’s problematic." Of course, with this kind of rhetoric the 10 Year will be trading at 8% tomorrow, followed up by Clarida saying not even 9% would be attractive, and so forth. When you have the world's largest bond fund say it is not touching Greece with a ten foot pole essentially no matter what the yield, you get an idea of why Greek 1 Year CDS is trading 600/700. In the meantime, stocks continue to be blissfully unaware of what the surge in the dollar will mean to Obama's export-led US manufacturing utopia. Oh well, at least we can continue to export "advanced" Wall Street services to Greece (and most other European peripheral countries) post default, courtesy of every domestic restructuring firm which is currently brushing up the "sovereign reorganization" tombstone pages in its pitchbooks.
The nation needs to borrow a total of 32 billion euros this year, Petros Christodoulou, director general of the Public Debt Management Agency, said in a Bloomberg Television interview on March 31. He declined to say how big the dollar issue might be.
“We’re talking now about what the market sees as a solvency issue,” Clarida said.
Greece is struggling to cut its budget deficit, the largest in Europe, from 12.7 percent of gross domestic product, prompting investors to dump Greek assets.
Finance Minister George Papaconstantinou told ANT1 television that Greece doesn’t need additional austerity measures after the European Union and the International Monetary Fund agreed to terms for an emergency support package.
‘Not a Lot’
“The size of the packages being discussed now, though big by IMF standards, may not be enough for Greek refinancing needs,” Clarida said. “Compared to the amount of debt Greece has to roll over, it’s not a lot of money.”
It may not be a lot, but it is coming, and it is coming at insane rates: as a reminder Greece has to roll a few billion in 6 and 12 month Bills next week. With both 6 and 12 month spreads at ridiculous levels, last trading at 6.9% and 7.2%, respectively, we have a feeling the Greek situation could be resolved as soon as next week. It is simply impossible for a country to exist if it has to fund near-term maturities in the 7% range. Furthermore, if most US accounts do what PIMCO does and say "no mas" it is indeed over.