The market looks happy to know the result of the election in Greece. I just would like to tell the same thing as Sir Winston Churchill did immediately after the British victory in North Africaq. “Now this is not the end. It is not even the beginning of the end, but it is, perhaps, the end of the beginning.”
TOPICS of the WEEK:
I made a progressification two weeks ago, on May 28, 2012 about the definite future of Greece. Let me quote what I said.
Quote: Now, let’s think in Greece’s shoe. What is the optimal solution to them? They have two sets of cards 1. To accept austerity policy or Not to accept austerity policy2. To stay in Euro or Not to stay in Euro Greece should be skillful in handling those two cards. The order and timing of showing the cards to outside Greece is important.
The best story is to get as much financial support, and to default outside debts, and get out of Euro. Greece needs financial support to pay existing debts. In order to get such support Greece promises to accept austerity policy. (This is just done!) Greece must negotiate to make the degree of austerity favorable to its people. (This will happen soon!) Existing debt is more than Greece can pay, so Greece will default the debts, including the new money, by saying domestic situation is this and that. In order to be internationally competitive, Greece should be out of Euro. This will make the Drachma a weak currency, and it will help to adjust balance of trade. Having higher inflation would be accepted better to Greece people than austerity policy such as reducing salary to half. (This will happen before the end of 2012.) This is a definite future of Greece.
Unquote:
MARKET: June 15 June 8 ChangeNikkei 8569.32 8459.26 1.30% TOPIX 726.57 717.74 1.23%
The Japanese markets will start positive affected by the taking-a-breath at Euro-zone. The move after that is really hard to tell, as the markets around the world will soon recognize that the Euro-crisis is far from over. POLITICS: Mr.Noda has acquired support to his comsumption tax hike from two opponents parties. It is, however, much harder for him to get support his own party. Some are openly against the policy saying that is against the party’s manifest. Political scene of Japan is very fluid again. This political risk is the largest risk factor to the stock markets. I think the most likely scenario is Noda is going to split DPJ and makes alliance with LDP to form a new government. ECONOMY: There are many mixed economic figures in the market. NUCLEAR ACCIDENT & EARTH QUAKE
The radiation level of Tokyo is 0.049 sievert this morning. Same level as of last week. The life in Tokyo is normal.
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