Let’s consider a pair of words with Greek origins: drama and paradox.
The drama was Greek Prime Minister George Papandreou suddenly dropping his plans for a public referendum on the financial future of the country. The same one that threw a European rescue package into jeopardy just two days ago.
The paradox is that the resulting political instability in Greece today could mean more stability ahead.
Jacob Kirkegaard studies European economic reform at the Peterson Institute. He says it’s likely Greece will soon have a short term caretaker government in place, likely led by a someone who can gain bipartisan support for the EU bailout plan. That means Greece will get its next financial injection. It all bears enough of a resemblance to “stability” to boost markets after a week of huge uncertainty.
Kirkegaard says investors were also strongly reassured by the European Central Bank’s surprise decision to cut interest rates a quarter point, to 1.25 percent. Kirkegaard says this move, announced by the new head of the ECB, Mario Draghi, signals a commitment from the bank to stay directly involved in the preservation of financial stability in the euro zone. The move essentially eliminates the need for what many saw as a weak element of the euro zone bailout plan, the European Financial Stability Facility (EFSF). Kirkegaard says the EFSF had limited funds, but the ECB can print as much money as it needs. At last, the bazooka that Europe was seeking is taking shape.
Also on the show today, we’ve got a number to raise your pulse and ours: $37.7 billion. That’s the estimated cost of waiting for in-home appointments. You know, the cable guy, the contractor, etc. TOA Technologies which does mobile workforce management software, commissioned the “Cost of Waiting” survey.
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