Philip O'Sullivan's Market Musings

Financial analysis from Dublin, Ireland

Market Musings 4/7/11

with 2 comments

It was a quiet enough weekend in terms of business news, with Greece again the main focus for market watchers.

 

Last week’s market enthusiasm over the latest developments in Greece surprised me. Leaving aside the costs of running the country, the EU-IMF’s €12bn emergency loan for Greece only covers Greek debt maturing up to August 20. In addition, the EU-IMF plan for Greece requires it to privatise billions of euro worth of State assets, and I don’t see where they are going to find the buyers to meet that goal. Also, given Greece’s past form, it will be interesting to see if its politicians come good on their promises to right-size the public finances, a point that I suspect prompted Eurogroup chairman Jean-Claude Juncker to say that: “The sovereignty of Greece will be massively limited“. And a final pointer on the Hellenic hot potato – S&P says the rollover plan may put Greece in selective default.

 

Speaking of debt restructuring, here is a good article that compares the Uruguayan experience with the Argentinian one.

 

(Disclaimer: I’m a shareholder in ICG plc) Turning to Irish corporate news, I was unsurprised to see the Sunday papers speculate about One51’s intentions for its shareholding in Irish Continental Group. I wrote about this in my last blog, but one thing I neglected to mention was that One51 is also the largest shareholder in UK waste group Augean plc, a group that it previously held takeover talks with. Should One51 be tempted to cash in on its ICG investment, it should be noted that when Doyle Shipping placed a similar sized stake in ICG to what One51 now holds back in May the placing was oversubscribed.

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Written by Philip O'Sullivan

July 4, 2011 at 8:25 am

2 Responses

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  1. It might be worth noting that, while Argentina & Uruguay have similar growth rates, Argentina’s inflation rate (the unofficial rate, not the fiddled state numbers) is much higher than Uruguays.

    I’ve no idea whether that ties in to different default attitudes, though.

    Andrew Cusack

    July 11, 2011 at 7:37 pm

  2. You’re right in saying that Argentina’s official inflation data is extremely dubious. However, you’re also lucky to be saying that where you are given that the Argentine authorities are now pressing charges against anyone who queries official government statistics: http://www.bloomberg.com/news/2011-07-11/argentina-files-criminal-charges-against-company-for-false-cpi-reports.html

    I’m not sure about whether inflation has an effect on perceptions on the default across the Argentine and Uruguayan populations, but I would say that if Argentina doesn’t rein in its monetary policy, which to me appears out of control, we could easily see a repeat of the economic tragedies of the past.

    Philip O'Sullivan

    July 12, 2011 at 7:07 am


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