The Greek question. It’s all Greek.

The Hellenic Telecommunication Organisation (OTE) is to sell a euro benchmark Bond in order to finance itself and redeem previous bond issues which mature both this year and next.

So, what are its chances of successfully issuing the bond in the international bond markets?

Quite good!  OTE is 40% owned by Deutsche Telecom – although that is NOT the only reason.

CONFIDENCE is the new Euro buzzword.

Even Greece’s Central Bank Governor Provopolous is feeling it. He says that the worst of Greece’s crisis is over because Greek 10 year bond yields have no dropped below 10%! That’s a bankers measure of “confidence!!

In spite of a falling GDP (a further contraction of 4% is expected this year) , unemployment at 26% (and rising), strikes and a very cold Greek winter, according to Mr Provopolous “There is improved confidence” and  “We have turned the corner”.

The bank Governor seems to be confusing the ECB’s promise to “do what it takes” to save the Eurozone with internal “confidence”.

In fact, as a result of last year’s declaration of love for the Eurozone by Mario Draghi, ALL  Eurozone bond yields have fallen. Greek economic policies have  had very little to do with what so far, appears to be the “Miracle of 2013” ……..when Markets are rising and bond yields are falling. The Athens Stock Exchange (ASE) has risen by over 10% since the beginning of the year!

In reality, all the unusual market activity further reinforces that fact that the dislocation between the REAL economy and the virtual money-printing-driven economy is more-or-less complete. The Markets are performing in spite of the economy and NOT because of it.

“Confidence” is all very well…but confidence in what exactly?

Economic recovery or the ability to borrow more?

Whilst Greek politicians are pointing to the fact that Greek bank deposits are increasing, have they forgotten the 50 billion euro recapitalisation which Greece’s largest four banks are still awaiting?

Only THREE MONTHS ago (October 29th  2012), the Greek banking sub index tanked by 13.59% as a result of the unresolved recapitalisation. It remains unresolved.

The only change has been the European Union’s temporary rescue fund which  has “earmarked” about 50 billion euros for the Greek banks….and there will be another delay in paying the money over. There always is. June 2013 is the latest estimate.

The “confidence” cannot possibly be related to any future growth of the Greek economy because that cannot happen until the banks have been mended.

Apart from the bank recapitalisation, there is another EU-IMF allocation of 31.5 billion euros for the banks to “restore their balance sheets” so that they can at least think about participating in Greece’s economic recovery.

Greek bankers and politicians may well be feeling “confidence” but can they honestly say when Greece’s 5-year recession (depression) will be coming to an end?

It looks as if Greece’s recovery is firmly embedded  in the future . Permanently.