Tuesday, February 24, 2015

“House of Cards” this is not | Is Greece off the agenda, for now?

For those of us on this side of the Atlantic, who might be forgiven for taking at least some of their impressions of US political / economic life from the hugely popular “House of Cards” series, featuring that most versatile of actors, Kevin Spacey, the testimony of Janet Yellen, chair of the Federal Open Market Committee (FOMC) to the new chairman of the Banking, Housing and Urban Affairs committee and his colleagues, was just a little underwhelming.

Apart from lecturing the foremost economist in the western world on the various methodologies for measuring inflation (talk about teaching your grandmother how to suck eggs), and paddling their own and their party’s current favourite hobbyhorse, Federal Reserve transparency, or the lack of it, the questioning members gave Ms. Yellen little scope to enlighten the rest of the world about the matter that exercises us, the probable timing of core interest rate rises in the US. This is now, officially, to be dealt with on a meeting to meeting basis.

The EURUSD pair oscillated around somewhat during the testimony, and then settled pretty much where it had been to begin with. Ms. Yellen testifies again today, but more of the same is expected.

Is Greece off the agenda, for now?

The Greek government has received approval from the finance ministers of the Eurozone for an extension of its bailout, but this is bound around with lots of concerns about a lack of specificity on the proposals being made by Greece for compliance, and the need to have them implemented before they cash is actually paid over. Up front and centre in the voicing of these concerns is Christine Lagarde, managing director of the IMF, one of the bodies that the new Greek government promised their supporters before the election they would have nothing more to do with.

The European Central Bank and the Commission itself, the other members of the hated troika, are also flexing their muscles. As we said previously, when you are in negotiations, it is vital that you know where the power resides.

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