Markets rejoiced today because Greece will not be leaving the Euro zone. Wow, talk about setting the bar low.
How about this: Markets surged today because Goldman Sachs et al. were able to manufacture a short squeeze by driving the futures down overnight and then hammering the little guy traders who all jumped aboard when the market fell through what could have been technical support?
Which scenario is more likely?
Concerning Greece: Let's face it, Greece is in default. The only question is how will the default be structured in order to give the appearance of an "orderly default." In other words, how can Germany and France make Greece give the semblance of adhering to some sort of austerity program, when everyone knows that it can't really afford any sort of austerity since it's in the middle of a depression?
And if Greece doesn't adhere to austerity, why should Rome or Athens or Lisbon or Madrid?
Germans are still recalling how expensive it was to bring their “cousins” in the former East Germany into the fold; they cannot even begin to calculate how much it will cost to rehabilitate Greek monetary affairs, and they’d really rather not even try. Better to let Papandriou pretend to embrace some sort of austerity.
If Merkel tries to push for German aid to Greece, then her government is in jeopardy of toppling and in a new election would be toppled badly.
So let's sit back and enjoy the Political Theater that's sure to ensue. But don't think for a second that Greece isn't in default.