The tragicomedy in Greece continues. The most recent version of Greek austerity measures are slowly making their way through the legislative process. The next step takes place this weekend where the legislature will give their thumbs up or down. For us, the big question is not whether or not the measures pass (we have little doubt that they will) but how long it will take the legislators to get the heck dodge after casting their votes. Although apparently the current protests are relatively subdued to the ones that took place last year.
Here are some details from Reuters:
Outside Greece's parliament, police fired teargas at black-masked protesters who threw petrol bombs, stones and bottles at the start of a 48-hour general strike against the cuts ordered by the "troika" of international lenders.
But the street protests against the austerity - which many Greeks blame on Germany - were relatively small compared to last year's mass rallies.
Unions have called protesters to rally again in Saturday and Sunday after they chanted on Friday: "Do not bow your heads! Resist! No to layoffs! No to salary cuts! No to pension cuts!"
The biggest police trade union said it would issue arrest warrants for Greece's international lenders for subverting democracy, and refused to "fight against our brothers."
That last part made us chuckle but in all seriousness, it demonstrates the circularly convoluted universe in which Greece is currently operating. The police, whose salaries and pensions are being affected by the austerity measures, are expected to provide protection from those people protesting the austerity measures. Careful, think about that too much and your head may explode.
The reaction in the equity markets in Greece and their conjoined twin Cyprus were, no shock here, negative. The benchmark Greek FTSE/ASE 20 Index dropped 4.7% and the benchmark Cypriot index was down 5.1%. Less expected was the muted reaction in the other European stock markets, particularly in the fellow PIIGS countries. Italy, Spain, Ireland and Portugal were only down 1.8% or less. Here's the bottom 10 performing benchmark equity indexes in Friday's session:
The FTSE/ASE 20 Index still has some breathing room above the 2011 lows:
However the situation looks a little more precarious if we extend our view back to 2007. We also have GDP in growth in the following chart (estimates provided by the IMF), which is expected to be flat through 2015. Those estimates are a few months stale and it will be interesting to see what adjustments will have been made when the new estimates are released in April.
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