European semantics now on Greece

EU head Rehn yesterday summed up what European officials want to avoid, “we have to make sure that there is not a Lehman catastrophe on European soil.” What the Lehman catastrophe was is still up for debate though, was it that they went down or was it how they went down (some of course think both). Semantics seems now how the ECB is coalescing with the EU on an agreement on helping Greece. Trichet said he is now for incentivizing current holders of Greek debt to rollover their existing position when they mature. I say semantics because by altering the terms of a new issue AFTER the existing ones mature, it won’t be a technical default as would altering the terms before they mature be. What incentives would be used to entice is yet to be determined. Either way, on the Trichet comments the euro is at a 4 1/2 week high vs the US$ and most European stock markets are up modestly. Elsewhere overseas, the RBof Australia left rates unchanged as expected at 4.75% as they believe inflation will be close to target over the next 12 months. Without a recession in 20 yrs and a benchmark rate one of the highest in the world, the RBA has revealed the magic elixir, don’t have negative real interest rates.

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