Papa won’t back down

After a day of ridicule and reaming, Greek PM Papandreou has stood still with his desire for a referendum as he said “we will not implement any program by force, but only with the consent of the Greek people.” The Greek gov’t is financially bust because the private sector can’t afford the huge public sector and promises need to be broken and the PM wants to ask the Greeks if they want their promises taken away. What does he think they’re going to say? On the other hand, many Greeks want to remain in the euro. After meetings, his cabinet supports him but all is for naught if Papa loses his confidence vote on Friday and a new gov’t would soon follow. The Greek note maturing Aug 2012 is trading at 39 with a yield of 205% vs 181% yesterday. The drama yesterday resulted in today’s 3b euro planned sale of AAA EFSF bonds to be canceled “due to market conditions.” They will try again in the “near future” proceeds of which will go to Ireland. Germany reported the 1st increase in the amount of unemployed in Oct since June ’09 vs an expected fall. After falling earlier today, Italian bond yields are rising with the 10 yr up to 6.25%. In Asia, the Shanghai index rose to a 6 week high on speculation that policy makers are closer to easing financial conditions. Ahead of the FOMC meeting where QE3 discussions will take place, the MBA said refi’s fell .2% while purchases rose 1.8%. Maybe in today’s press conference Bernanke will explain to us why he thinks even lower interest rates from here will somehow make things better. The S&P futures are well above fair value after going out rich last night. II: Bulls 43.2 v 40 Bears 36.8 v 37.9

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