The Globaliser

'Greece: conditional support, but no “Super Bazooka”', muses Economist
Jürgen Michels, 'which would fully convince markets about the soundness of
Greece’s and the other periphery member countries’ fiscal positions... for while the
EU council statement outlines the potential structure of a possible rescue
package for Greece which could be announced on Feb 16, it remained very vague
and was more evidence of a political will and not a concrete rescue package...
also unclear is, if euro area countries will quickly provide a pre-defined amount of
funding to Greece, or if they will provide a back-up solution in case Greece is not
able to find sufficient funding in the market... although it seems state owned
banks in Germany and France will play a role in funding the support package'.
Beware Bulgaria's contagion risks

'While direct contagion from Greece on Bulgaria, Romania and Turkey has
been moderate thus far', agrees Economist Ilker Domac, 'we believe there are
valid reasons to be cautious... to be clear, our assessment of potential contagion
channels in the sphere of trade, finance and sovereign risk, shows no major signs
of stress... but, Bulgaria does seem to be in a less favorable position, followed
by Romania and Turkey - given the significant presence of Greek banks in the
country... worth watching, since adverse shocks associated with Greek banks’
funding could lead Greek banks to shrink their balance sheets, which could in turn
trigger a sharp contraction in credit availability'.
Korea's policy shift

'The Bank of Korea chose not to further rattle markets', concludes Economist
Jaechul Chang, 'in choosing to leave the policy rate frozen at 2% for a 12th straight
month... uncertainties surrounding the global economy behind the rate freeze... this
is even as the BOK Governor did not believe recent concerns on sovereign credit
would have a serious negative effect on the Korean economy... as such, we now
expect the BOK to raise the policy rate by just 100bps and only in 2H'10... vs
125bps in 2010 with the initial rate hike in 1Q'10 previously'.


The Globaliser - 12 February 2010