BLUF (Bottom Line Up Front)
“Beware of Hedge Funds Bearing Gifts” observed the negotiating tactics, being executed by Greece, in order to get a lower interest rate cost on its debt[i]. These tactics involve the creation of a primary budget surplus by Troika edict; which then strengthens the negotiating position of Greece by giving it a modicum of apparent fiscal autonomy.
It was suggested that the other PIIGS were observing the behaviour of Greece and the degree of success associated with these tactics. Spain has become the latest member of the herd to adopt these tactics. Last week Finance Minister Montoro announced the intentions and capabilities of Spain to generate a primary budget surplus in 2014[ii].
Ireland’s European Minister Lucinda Creighton was also heard singing about how the Germans were seduced in Dublin’s fair city, where the girls are so pretty, so that Ireland’s fiscal position is now allegedly very much “Alive, Aliveoh”[iii].
As former US Secretary of Transportation Norman Mineta opined:
“When you see one of something happen, it’s an accident; when you see two of the same thing happening, it’s a trend, something. When you see three, it’s a plan”[iv].
We are now at the position where three of the same thing becomes a plan.