In the wake of Greece’s downgrade to junk status by Standard & Poor’s, the temptation to scramble around for a quote or metaphor drawn from the Ancient Greeks was too much for most commentators.
“Act IV, Scene III: Greek tragedy takes yet another twist” ran the title to BNY Mellon’s commentary. “Greek tragedies are of course about suffering,” wrote Ousmène Mandeng of Ashmore Investment Management.
Let us not be afraid to join in. “Zeus does not bring all men’s plans to fulfilment,” wrote Homer in The Iliad – ah – while in The Odyssey, he more encouragingly opined: “A small rock holds back a great wave”. Could the small rock be a certain rescue package, the great wave...?
Meanwhile, the rumours about how exactly Greece got into this mess and what it will have to do to get out of it were getting wilder and wilder. State employees get paid a bonus for turning up on time (a bit like bankers, then), according to the BBC. The retirement age will have to be raised from an average 53 at present to 67.
The mud-slinging was also going swimmingly. The German news programme, Tagesschau, suggested the French had nefarious motives (the words “as always” were not actually used, but were, I think, understood) in pushing for a rescue package. An online article entitled ‘Ein gutes Geschäft für Frankreich’ (‘A good deal for France’) quoted former French prime minister Laurent Fabius as saying France wants to help Greece for egotistical reasons. Otherwise France might be “pulled into the whole strudel”. (What?)
And as always, the BBC comments board was good for a laugh. ‘Suchisam’ picked up the classical theme: “The Trojans had it right: beware of Greeks bearing gifts!” You tell ‘em Suchisam.
So how bad is it? The intonations of gloom have certainly been intense. Greece is the new Lehmans, the new sub-prime, according to some newspapers. But commentators from the asset management industry were generally rather low-key last week.
Paul Brain, manager of the Newton International Bond fund, reminded us that, “There is still some appeal to be found in Greek bonds. After all, they yield more than those of any emerging market government which has leant on the IMF for support, or has gone through a restructuring, but furthermore, the Greek government has actually put in place plans to reduce its burgeoning deficit.”
And for Ashmore’s Mandeng the whole business was a useful reality check.
“For investors, the threat of default by Greece provides a healthy reminder that default risk must be associated with every sovereign not just with emerging markets,” he wrote. Then, proving you can leverage the Ancient Greeks and stay sober, “The Greek tragedy may therefore help rebalancing allocations between advanced economies and emerging markets, namely to where risk is lowest.”
Fiona Rintoul, Editorial Director
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