For a brief, shining moment yesterday, all seemed well with the world. The International Monetary Fund issued its biannual World Economic Outlook: A “global depression” has been averted. World GDP will grow 4.2% this year.
Of course, the day before, the IMF issued another biannual report everyone chose to ignore, the Global Financial Stability Report. It said the banks have stabilized, more or less, but now the global fund has “concerns about advanced country sovereign risks could undermine stability gains and prolong the collapse of credit.”
Oh yeah. That sovereign debt thing. Funny that boil should fester now…
New numbers from the European Union statistics agency reveal Greece’s 2009 budget deficit will be even higher than previously expected. Five months ago, the EU projected a deficit totaling 12.7% of GDP. Now, it’s 13.6%.
And “uncertainties” about the quality of Greece’s data could bump it up past 14% before all is said and done. Those “uncertainties,” by the way, include the swaps engineered for the Greek government by everyone’s favorite investment bank, Goldman Sachs, aimed at hiding the deficit’s actual size.
So here we go again. Yields on 10-year Greek bonds are up to 8.45% this morning. And markets everywhere are swooning. Hot money is fleeing to the greenback. The dollar index is back above 81.5.
By the weekend, we’ll probably get another announcement from the IMF and the EU about an aid package that’s available for Greece should it be necessary, but they’re “confident” it won’t ever come to that. Yawn, stretch.
At some point, all this can kicking will come to an end. But we see no sign of it yet.