Some of the mountains appear to be coming to Mohamet, aka Charles Dallara in Paris. As I write (two French sources concur) a broad spectrum of Greece’s private creditors is holding a meeting. This rainbow represents, perhaps, the Delegates at the Court of Dallara.
Dallara, head negotiator on behalf of the International Institute of Finance (IIF) left Athens over the weekend to answer the urgent call of a Chicken MacMuffin at the MacDo on the Champs-Elysees after the last round of talks proved inconclusive. He has pleaded for a quick resolution before time runs out, but has not as yet declared whether he will be pitching in with any compromises in order to help that process. The smart money this afternoon, however, is saying that he will.
“The goal is to complete the talks, even within the week,” said Greek government spokesman Pantelis Kapsis, “We are now in the most delicate phase of the negotiations to complete the debt swap. It is clear that what happens in the coming days will affect the country’s course for years.”
I have been reading, and listening to, these various tragi-comic pronouncements by the Greek government for weeks now. They feel to me like the introductions made by arch narrators of ancient Athenian plays. The only problem is that we have been in a delicate place where history-changing completions might or might not rule the infinite future for what seems like, well, an infinite amount of time. But to be fair, the drive to drag these talks round in circles forever is still being led by Queen Christine of the Imfonite Gods, who once more added to the inscrutability of proceedings today by telling media hacks in Paris that, “The bigger the private effort, the smaller the participation of public creditors will need to be. If the level demanded of private investors isn’t reached, then public creditors will have to step in too.” La Reine Garde said it wasn’t for her to decide which official creditors should shoulder any additional burden – a statement greeted with huge relief in Berlin, Frankfurt, Brussels, Athens, Washington and New York.
Over in Davos meanwhile, Die Fuhrerine Merkel has told her audience that yes, we all dare to be more European, despite the fact that the being European-daring thing has rendered many of us penniless. But the eurozone problems, she adds, “started in America” which, I must confess, I hadn’t realised until now was a paid-up member: I really must try and keep up.
Slightly more than a few kilometres away in Lisbon, other things with no provenance at all in the US were going badly wrong: Portugal’s borrowing costs leapt to new euro highs on Wednesday, as the markets worried aka factored in the certainty that Lisbon will also eventually default on its debt commitments.
When I say ‘new euro highs’ here, what I mean is sort of Everests compared to previous Matterhorns. Just clock these figures: Portuguese three-year bond yields soared over 19%, while its 10-year bonds jumped over 15%, and five-year bonds just failed to hit 19%.
Unsurprisingly, Portuguese credit default swaps rose to 1,326 basis points – a cost of $1.33m to insure $10m of bonds annually over five years. These figures are what we credit dealers call “unsustainable”.
But Angela Merkel told her Davos devotees to hold firm: firewalls, she told them, are not the answer. “What we in Germany don’t want is a situation in which we promise something we can’t back up in the end because if Germany… promises something that can’t be kept if markets attack it hard, then Europe is really vulnerable.”
Ach so: Deutschland fuhre Europe. Naturlich. Oh how Angela Merkel gives herself away every time she speaks.