Staff teams from the European Commission (EC), the European Central Bank (ECB), and the International Monetary Fund (IMF) overnight gave an optimistic report on their recent visit to Athens to follow up on recent developments and implementation of policies under the economic program for Greece but the finance markets, it seems, are much more sceptical.
“The program is on track and that policies are being implemented as agreed,” said the officials while sovereign debt spreads for peripheral euro-area countries continued to widen.
Since the Atlanta Fed of the United States produced that graph up to 16 May for its weekly Financial Highlights, the spreads have widened further. Greece is up to 668 bps, Ireland 290 bps, Portugal 293 bps, and Spain 211 bps with Hungary up sharply to 495 bps.
With this kind of uncertainty in the offing and Nobel prize winning economist Paul Krugman declaring on his blog that “I’m getting a very bad feeling about the world’s economic prospects,” I would not be gambling on waiting for things to get better before holding my election in Australia.