A busy day at the coalface yesterday led me to be unable to get near to posting. Not for me this real blogging lark like Guido or others who have no seemingly gainful employment.
Anyway, between the various meeting I managed to glean that the eurofudge had indeed been born, perhaps somewhat late and not without complications, but a delivery. Even the few remains of my investments perked up a little (still 50% down on the year, sigh).
And now therefore it is the-morning-after-the-morning-after-the-night-before. And into the sunny dreamland that is the City the cold hard realities are going to start to sink in:
1- Yes, MerKozy got a deal, but the Greece debt reduction is only 50%, the leverage on the fund is 4x not 8x and the Banks are going to raise e100 billion nor e200 billion. So this is almost exactly half of what was being negotiated - a true fudge.
2- Greece is still going to have public debt at 120% - that is er, 50% more than the UK where we are in a dire state indeed. Is this a long-term solution? No. Will Countries still be better off exiting the euro - yes.
3- Berlusconi has not come up with any real meat in terms of cutting Italy's spending. Unsurprisingly Italian bond yields are not falling from their high levels. So this guarantees another part to this crisis next year.
4 - The result is that there will have to be some kind of fiscal union, which means political union in Europe too. Or a bureaucratic dictatorship. This is the start of a long, and promisingly tedious, story.
5 - Little of what has been agreed has been approved, so the half-thing, such that it is, can still unravel.
Still, it is better than no deal at all in the immidiate future as it prevents an economic collapse in 2011/12. on the other hand, more fudge pushes us further into the Japanese paradigm of zero growth prospects in return for no collapse.
Like a bunch of pretty flowers, this deal will soon start to wilt. The key question is how long will this take? I think the markets are seeking a Santa Rally to help with those year end bonuses so not before Xmas. perhaps by February the clamour for more and the realisation of the deepness of the hole will be upon us once more.