Saturday, January 22, 2011

Did the Greek Market Just Bottom?

by J. Bruun

Seeking Alpha

January 21, 2011

Yesterday the Athex composite surged 4.5% to 1507, apparently on the rumor in the German news outlet Die Zeit that there are plans to lend Greece money at a low rate to repurchase its own debt, thereby reducing its overall debt to GDP but also its interest expenses going forward.

It is, in my opinion, one of the better plans, as it still punishes those who lend money to Greece looking for additional yield, and could potentially be a viable solution for Greece.

I am 100% aware that there are many many problems with this solution, so why did it have such a big impact?

If we take a step back, the Greek market had its low on January 10, 2011 at 1354 (about 100 points below the early March 2009 low); we are now up 11.6% since then, in a little over one week. To my knowledge, not much has really happened to justify this -- except perhaps for some so-so bond auctions from other PIIGS.


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