Well, Greece - what a fine mess... proof that the pundits don't have a clue what is priced in or what is not... proof that in humans, wishful thinking often overrules common sense... proof that the only limit to Socialism's spending other people's money is when that money runs out... proof that while people as individuals normally act more or less in what they believe is their own self-interest, people in crowds are really capable of mass stupidity... and, as if we needed more proof, politicians should never ever be in charge of negotiations...

Meanwhile it continues to be in the best interest of US oil producers to pump the oil they've already tapped. Most analysts seem to underestimate the cost of reopening a shut-in well, especially fracked wells, which may require refracking (a new scrabble word) to really get oil flowing again... I contend this makes oil cheap and possibly cheaper for several years to come (barring a massive supply disruption). As always, of course, the cure for low prices is low prices. Speaking of new scrabble words... the activity prior to fracking is prefracking, which you can repeat if needed leading to reprefracking, which is a lot of points. Of course the folks who perform the fracking are frackers, but the prefrackers are usually just called roughnecks, drillers, and tool pushers (each of those being a job description in the oil patch).

 

Eoin Treacy's view

Thank you for this informative email and I enjoyed your scrabble suggestions. I think a lot of people share your frustration with the Greek government’s negotiating tactics and we are all on tenterhooks as we observe how the situation is unfolding which is contributing to volatility. I wouldn’t want to have to vote in the upcoming referendum since the result is likely to be difficult regardless of the outcome not least because the question is ambiguous. 

Greek yields remain on an upward trajectory suggesting that an unruly outcome continues to be priced in. It is also worth considering that yields today are still a long way from the levels seen in 2011 before the package of solutions that is now due to expire was implemented. There is nothing on the chart to suggest yields are not going higher. Widespread unwinding of long positions has not occurred because large quantities of Greek bonds are held by the ECB, IMF and Eurozone governments. It is therefore questionable to what extent bond yields are now a barometer of the trouble Greece is in.