Now there really must be an emergency
- After two emergency Euro summits yesterday we now have a weekend emergency summit, a Sunday emergency summit, an EU emergency summit. There must be an emergency. Broadening this to an EU level summit is ominous (many believe if Greece were to leave the Euro it would leave the EU too, without a deal).
- To prevent de facto exit the creditors would have to trust the Greek government, and Greek bank depositors would have to trust Greece stays in the Euro. A twilight world where Greece is technically in the Euro but generates an electronic Euro that cannot escape the banking system is possible – and would suggest high or hyperinflation as a risk in Greece.
- Chinese equities continue to fall – though are still comfortably up year to date. Media headlines are getting very dramatic on this, but it is worth remembering how unimportant listed companies are in any economy. The risks are that media reporting of the moves damage economic sentiment.
- The US offers a moment of sanity with the FOMC minutes of the Federal Reserve. The Fed has delayed raising rates far, far longer than is normal – the question now is whether a few little local difficulties elsewhere in the world will offset the domestic need for a rate rise.