Monday, 26 January 2015

10:26 – Barbara is doing very well, even after cleaning house yesterday. She’s up and walking around frequently. She’s checking her work email a couple of times a day, and keeping busy labeling/filling containers for science kits.

It seems that the communist Syriza party has won the Greek election, coming within at worst one or two seats of an absolute majority, with the neo-Nazi Golden Dawn party placing third. Given that Merkel and the Germans despise Tsipras and the Greeks, this is unlikely to end well. Merkel believes, wrongly, that Tsipras is bluffing and that in any event the eurozone has the necessary mechanisms in place to survive Greece crashing out of the euro; Tsipras believes, wrongly, that Merkel is bluffing and that the troika will allow Greece to default on its debts and still remain in the eurozone. At this point, the best that anyone can reasonably hope for is that both sides negotiate calmly and arrange an orderly exit from the euro for Greece. That may actually happen, but I think it’s much more likely that one or both parties will misjudge and the result will be a disorderly exit from the euro for Greece. That’s going to be ugly, and the row of dominoes toppling as the contagion hits Italy, Spain, Portugal, and eventually France will be uglier still.

The ECB’s QE policy announced on Thursday was much larger than expected, but still far too little far too late and with far too many conditions and limitations on it. Draghi’s vaunted “bazooka”–at a third the percentage of GDP of the QE in the US and UK and years too late–is likely to be a damp squib.