No further dramatic interventions by the Russian authorities overnight with the result that the rouble has opened five percent weaker against the dollar in Moscow.
With the Greek government again in peril and Italy flirting with a junk credit rating, it’s all starting to feel a bit familiar.
Greek stocks suffered their steepest daily fall in more than a quarter century on Tuesday after Prime Minister Antonis Samaras brought forward a presidential election.
Some interesting action over the weekend: in a foretaste of this week’s EU elections, Greece’s leftist, anti-bailout Syriza party performed strongly in the first round of local elections on Sunday, capitalizing on voter anger at ongoing government austerity policies.
Sources told us last night that Spain may recapitalize stricken Bankia with government bonds in return for shares in the bank. That would presumably involve an up-front hit for Spain’s public finances (it is already striving to lop about 6 percentage points off its budget deficit in two years) which might be recouped at some point if the shares don’t disappear through the floor.
The ECB’s view of this will be crucial since the plan seems to involve the bank depositing the new bonds with the ECB as collateral in return for cash. If it cries foul, where would that leave Madrid?
Greece faces another election on June 17. Although they reject the austerity required by the bailout, most Greeks want their country to stay in the euro. However Frankfurt and Brussels say it is impossible for Greece to have one without the other: no bailout means no euro and a return to the drachma. Whether the Greek people believe these warnings could have a big impact on the election result.