"There cannot be a crisis next week. My schedule is already full."
- Henry Kissinger.
All these bank runs are getting exhausting. Two and a half years after the failure of Northern Rock and a year and a half after the failure of Lehman Brothers and most of the rest of Wall Street, Greek investors are finally joining the party. ??????! In this case, better never than late. On the one hand, you can believe that some kind of political settlement to Greece's seemingly intractable fiscal problems is possible. On the other hand, just follow the money. Depositors in Greek banks are weighing up the options and seem to have decided in favour of branches of HSBC, Société Générale – despite its awkward serial habit of employing massively fraudulent anomaly-causing staff – and sundry Swiss banks. According to the FT, Greek savers took €10 billion of deposits (or 4.5% of the total) out of the country's financial system during January and February. UK bank depositors should not be feeling too smug at this point. No matter how carefully you check your bank statements this year, the post May 6th new government will be on the prowl for any spare cash. Cynicism or realism might suggest that anyone luxuriating with surplus money in the bank will have at least some of it forcibly removed. For those on higher pay, the forcible money removal process has already begun, at source. Oh, to be in England, now that April's there. This is probably not what Robert Browning was thinking about.
There was once a time when government bonds were viewed as safe investments. Safe as houses, you might say, if you weren?t keeping up with events. But that was then, and this is now. Something rather ominous has started to happen in the government bond markets of the west. Under normal market conditions (remember them ?) corporate bond yields trade above the yields on government debt. This is logical insofar as corporate bonds carry higher risk than governments, which can print money and levy taxes to make good any shortfall in their requirements for income. But higher quality companies are now in the unusual position of seeing their debt offering lower yields than those on government bonds with the same maturity. Bloomberg points out…
