Friday, April 22, 2011

The plot's too thin to turn this into a Greek drama

by Nils Pratley


April 21, 2011

How exciting; an alleged attempt to manipulate the Greek bond and stock markets by spreading the false rumour that the country would seek to restructure its debts over the Easter weekend. It gets better: Citigroup, the giant American bank, is the name in the frame.

Unfortunately for conspiracy theorists, this entertaining tale lacks a smoking gun. Sorry, but exhibit A – an email from a Citigroup employee – doesn't qualify. It refers to "increased noise" about an Easter restructuring and reports how prices had started to react, but does not claim any inside knowledge of official negotiations.

OK, maybe the trader was being excitable, and maybe the email added to the noise, but half the financial world has been talking for weeks about the likelihood of a Greek debt restructuring and attempting to guess the cost. Markets are always noisy.

Who knows, maybe the Greek prosecutor will uncover exhibits B, C and D. But, as matters stand, lofty contempt would be a better stance for Athens to adopt. It's not pleasant to see your bond prices pushed around by rumours, and Greek worries about the power of markets to create havoc are understandable, but protesting loudly is rarely the most pragmatic response. It can make you look ridiculous.


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