We are beginning the week with a relatively quiet trading start as the markets are pretty much unchanged from Friday’s close. A quiet Monday morning is definitely not unique when it comes to the bond markets but given the news that the Greek parliament passed the legislation to approve measures that would include a second bailout package, it is a little surprising that there is not a greater reaction.The lack of reaction is due to the fact that this was already baked into the market.
The whole EU story is far from over but the markets appear to have a limited reaction to the day-to-day drama because this a novel that has a long way to go with many more chapters. Therefore putting too much weight on one story line is probably viewed as an unnecessary over-reaction. The measures approved by the Greek parliament are worth noting. The measures included a 22% reduction in the minimum wage, pension cuts and an immediate layoff of around 15.000 state workers. As one would expect the Greek public has responded with protests and riots.
The issues in Greece makes those of us who do not have the pensions/benefits of state/municipal workers hoping that our local politicians are learning something from these events. While I do not fault our friends, family or neighbors from enjoying those great benefits and getting to retire at 45 with ¾ quarters pay (ok maybe I am a little bitter), they are coming at the expense of the private work force employees who get a fraction of those benefits but continue to see their tax burdens increase. I for one cannot open up my property tax bill without seeing another increase. I must be sitting on an oil well because the city overstates my property value exponentially. I know that my complaint is much like many others. Or we get another form of taxing by the never ending toll increases. Would our services be that much different if the Port Authority did something drastic and actually cut expenses instead of just putting thru another toll increase? I know…a crazy idea.
The point here is that what is going on in Greece could and should happen here if it was not for our ability to print money by issuing municipal debt on the state level or issuing US Treasuries on the Federal level. The folks in Greece do not have those options and were therefore forced to cut costs or default on their debt. Food for thought…