Greece; Confidence Vote, Yes- Confidence, No.

So the Greek government has passed the vote of confidence and avoided a default scenario for at least another week. Of course there are still a few small problems; rioting in the streets, a tiny govt majority., E28bn of cuts to pass within the next 7 days, trying to actually implement said cuts, an interest bill for all the help they are being given that is in excess of 10% of GDP... little things like that which mean we shouldn’t all relax just yet.

Let’s face it, they are bust and they are going bust- the only options are to do it in an uncontrolled chaotic way or a more controlled, ECB supervised way with everyone bending (i.e. breaking) rules and setting up new definitions to stop it being an official default. Which means it won’t cause a CDS “credit event”... which means the value of CDS hedges will be destroyed... which means banks that thought they were hedged are in trouble and those banking on profits from CDS positions are disappointed.

There is no easy way out, not for Greece and not for the rest of the EU. IF the value of hedges is destroyed, people are less willing (if that’s possible) to invest in Ireland, Portugal and all. If Greece is allowed to withdraw from the EU, then the EU becomes a temporary convenience and not a lasting commitment- and where does that leave confidence in Ireland, Portugal etc? Once people realise they might leave as well and the protection afforded by membership of a single European currency and economic alliance withdrawn?

China has apparently asked how they can help- don’t suppose they’d like to buy Greece by any chance, would they? All of it? We can have it delivered..... We might even be able to arrange a “buy one, get one free” on certain European states... for a limited period only.

There (probably) is still a way to manage the situation to control the fall out, but it needs much clearer, more realistic and coordinated planning than has been evident so far- starting with an admission that simply lending more and more money is not the answer to any problems, in fact it is closer to being the cause. In the meantime, buying equities is still an act of faith and credit requires proper due diligence and care.

Maybe they should copy the successful, hard hitting, unpopular, swingeing and wide reaching spending cuts implemented by the UK government. Driven through against all opposition for the greater good of all of us, these cuts have led government spending for the first two months of this financial year, as compared to 2010 to... wait for it, hold onto your seats... to RISE by 4.1% in cash terms...

Someone get me out of this place... happy wednesday