Jay Mawji of Vantage FX (http://www.vantagefx.co.uk/) takes a look at news around the Eurozone on 13^th February 2012 – including news around bonds and bailouts at the start of February.

“Greece has agreed to a deal and unlocked the massive firepower of lending from the ECB, IMF and other bodies to help the Eurozone deal with its debt crisis and meet bailout payments. The delayed deals, broken promises and changes to legislation were all supposed to be accepted as part of the journey to bring about a calmer and unified European Union. However, this may well be far from it.

Hostility raged in the Greek Parliament as politicians of the ruling party who voted against the bailout deal have been told they will have their membership terminated. On the streets of Greece the people made clear their views. Riots and fires raged across the city, with the Greek people unhappy at the cost of the bailout. They feel Greece has now become the ‘beggar of the European Union’, giving up its sovereignty to accept bailout funds. Now that Greece has accepted the funds, they have to stick to extraordinarily tight Austerity measures which have seen the public sector vaporised and the private sector has virtually ceased to exist. Unemployment raged, reminiscent of the riots over the weekend, and the future of Greece is up in flames, much like the way Athens is at the moment.

The problem for the Eurozone is that the Japanese, infected by Eurozone Contagion, has posted extremely weak GDP figures. The Eurozone has always been a concern for the Japanese as investors have been hiding in the YEN, away from European markets. The over-valued YEN has diminished Japanese prospects of competing in the global economy. Asia now looks set to fight back. It is expected that we will see Japan make a concerted effort to weaken the YEN in global currency markets, whilst China, who refused to lend money to the Eurozone, is likely to swoop in and purchase cheap European assets as an extension of their global strength.

Whilst politicians and financiers in the Eurozone will be filled with relief at the ‘settling of Greek Debt’, the people in Greece are clearly unhappy and the Asian economies are preparing their retort to the effects the broken Eurozone has had on their economies.”

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