Category: News

Why Greece hasn’t defaulted on its debt-so far

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Does Greece’s recent debt restructuring constitute a default? The widely-watched decision on Thursday was no-or at least not yet.

Credit default swaps (CDS) are a form of insurance that investors can buy in case the issuer of a bond they`ve bought defaults, or can`t pay them back in full. If there is a default, also known as a “credit event,” the credit default swaps pay off the bond investors.

Deciding whether there is a “credit event” is the job of a group called the International Securities and Derivatives Association. The ISDA decided Thursday that Greece had not, in fact, defaulted on its bonds so far.

However, Greece still faces several major events that are far more likely to lead to a default, which would trigger the CDS payouts.

The ISDA was asked to rule on two questions related to the Greek government`s recent offer to bond holders to pay them only 46.5% of what they are owed.

The first question was whether a recent bond swap between the European Central Bank and the Greek government caused all other bondholders to be subordinated-or put behind the ECB is getting paid back. Subordination is usually one of the triggering events for payout of CDS insurance.

The ECB`s bond swap with Greece didn`t include the 53.5% haircut that the other bondholders faced. The ISDA was asked if this was not effectively a “subordination” of other debt holders. The committee of 15 voted unanimously no.

The second question was whether the current offer to bondholders, in and of itself, was a credit event. The committee also unanimously voted no.

Experts on CDS, and holders of Greek debt say these two votes aren`t necessarily noteworthy because they`ve been taken too early in the process to be meaningful.

For the ISDA to vote that something constitutes a credit event, a bondholder first must not get paid back. So far, all bondholders have been paid in full.

The real test will come on March 20, when Greece has a debt repayment of more than USD 14 billion euros (USD 18.6 billion). Greece is hoping to complete a debt exchange before then that would cut that payment by more than 50%.

As part of the offer, the Greek government has told bondholders it has the right to retroactively impose something called a “collective action clause.”

This means that if more than two thirds of bond holders agree to tender their bonds and take less money-the government can then impose the deal “collectively” on all the bondholders, even those who didn`t want to go along with it. That will be likely be decided by the end of next week.

At that point, a bondholder can complain to ISDA. The ISDA then will have something real to consider rather than something that is currenly only proposed or theoretical.

In fact, ISDA itself said: “The situation in the Hellenic Republic is still evolving and today`s decisions do not affect the right or ability of market participants to submit further questions… as to whether a Credit Event could occur at a later date.”

So this Greek drama isn`t done yet.

Just this morning, Pimco co-founder Bill Gross told CNBC that the decision on Greece is a “disappointment” to buyers of credit default swaps. Even so, Pimco-which is on the ISDA`s voting committee-joined the other members in deciding there was no default.

Still, Gross suggested that Greece still could trigger a “credit event” that would cause future payouts on the credit-default swaps. He added, however: “If I were a buyer of protection on Greece and have seen the result this morning in terms of no protection, you know I would be upset.”

When asked about this on Capitol Hill, Federal Reserve Chief Ben Bernanke said that the question could be asked once again that if and when a collective action clause is imposed, then the question will likely be reconsidered. Nearly everyone involved in the process believes that would be a triggering event for CDS.

The European Union originally wanted to avoid the triggering of CDS payouts for fear the ripple effects would be similar to what occurred in the market post-Lehman Brother`s bankruptcy. But those fears have faded, as the possibility of a Greek failure has been priced into the markets.

Copyright 2011 cnbc.com

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Indonesia to be largest luxury market in SE Asia: LVMH

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Indonesia will become the largest luxury market in southeast asia over the next few years, Ravi Thakran, LVMH`s head for South Asia, South East Asia and Middle East told CNBC.

According to him, Indonesian consumers currently buy their luxury goods mostly from Hong Kong and Singapore, but Indonesia`s political stability and improving retail infrastructure will help boost the country`s luxury sector.

“I really see a new `I` emerging in BRICS. Going forward, we believe the Indonesian market will be one of the big surprises,” said Thakran, who added that the country remains an under-penetrated market for high-end goods.

LVMH is planning to open 20 to 22 new cosmetic stores under its Sephora brand in Indonesia over the next two to three years as well as a big flagship store for Fendi within 12 months.

LVMH, the world`s biggest luxury goods group, has remained largely unaffected by global economic uncertainties. Its 2011 profit reached USD 4.04 billion and sales jumped 16 percent on year. Around 25% of its revenue comes from countries in Asia, excluding Japan.

Thakran said that Asia`s luxury consumers have `come of age` and they are acquiring a more refined taste with watches and jewelery being particularly popular. “When you look at jewelery or watches, Asians are buying the highest priced segment and the most sophisticated of the products.”

LVMH remains positive on China, which is currently the world`s second largest luxury market, with Thakran saying that he sees no sign of a slowdown in the country`s luxury segment.

“In fact, Chinese numbers across the region, be it in Dubai, Singapore, Hong Kong, they are buying more and more in all these markets.”

Copyright 2011 cnbc.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

No correlation between Oscar

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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What’s old was new again at the 2012 Academy Awards. The Weinstein Company’s ‘The Artist’ – a black and white movie about the “golden age” of film – was the first silent film to be named best picture since 1927. Sweeping the awards with five statuettes each were `The Artist` and `Hugo,` Martin Scorcese`s 3-D film about the origin of film, from Paramount, which both won five Oscars.

Not only is the whole Oscar celebration an advertisement for the movie business, but the awards singled out two movies that are an advertisement for movies. It`s a snake eating its tail circle that may have left the rest of America confounded, or worse, bored.

Once again, there is a massive disconnect between what`s successful at the box office – i.e. appealing to mainstream America – and what wins awards. `The Artist` has one of the lowest box office tallies for any film to win `Best Picture` – just USD 32 million. And `Hugo,` has grossed less than USD 70 million in the US, though it reportedly cost more than USD 150 million to make. Both the Weinsteins and Paramount should benefit from a post-Oscar boost. But these are simply not blockbusters.

The awards ceremony seemed geared to promote the experience of going to a theater: a montage featured actors talking about their first trip to the movies and their all-time favorite films, and popcorn was handed out in the aisles. Cirque de Soleil performers swung over the audience – an experience certainly better experienced in the flesh, rather than at home.

It makes sense that the Academy would want to promote moviegoing – the number of tickets sold in 2011 dropped 4 percent from 2010. But the approach may have only highlighted the fact that watching the ceremony from home was far less exciting than going to the movies or sitting behind celebs in the theater formerly known as the Kodak.

Last year`s show drew disappointing ratings despite its attempt to go young, with Anne Hathaway and James Franco hosting. And this year`s awards returned to tradition in the extreme. The movie montages featured films from decades ago, and even a sketch about focus groups was in black and white, set in 1939.

And the fact that the average Academy voter is a 62-year-old white man played itself out in the awards as well: Christopher Plummer won best supporting actor at age 82, the oldest age for a winning actor. The evening`s biggest upset was the fact that Meryl Streep, who last won an Oscar in 1983, won best actress instead of Viola Davis.

Twitter was buzzing with jokes and complaints throughout the telecast. I read a number of comments that the jokes on Twitter were funnier than the jokes on the tube. And a couple of fake Twitter accounts popped up – @Angiesright leg and @jlosnipple.

We`ll see whether the movie industry`s three-hour trailer for itself turned off viewers – we`re waiting for the ratings.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Is there money to fund Asia’s airline expansion?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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While booming air travel in Asia has led to a rush of new aircraft orders, there is also a growing concern that financing this expansion may be difficult, especially for over-leveraged airlines given a global funding squeeze.

“If an airline is profitable, getting the financing for expansion won`t be a problem,” says Kapil Kaul, CEO, South Asia, CAPA – Centre of Aviation. “But for airlines which have been taking losses recently and are over-leveraged, I think the next few years could be very difficult.”

At present Asia Pacific airlines operate 5,436 passenger planes between them and have placed orders for another 3,200 planes, according to latest figures from US-based aviation industry analyst OAG.

India`s airlines are among the largest purchasers, with the current fleet of 427 planes set to reach 1,000 by 2020, according to CAPA. India`s Indigo and Go Air have between them recently ordered about 200 planes for more than USD 23 billion, according to a Reuters report.

Further east, Indonesia is also a market with huge potential. Indonesian carrier Lion Air ordered a record 230 planes from Boeing, finalizing this deal last week at the Singapore Airshow.

Its national carrier Garuda, which also operates a low cost carrier, CityLink, plans to expand its existing fleet of 89 aircraft to 194 by 2015.

Neighboring Malaysia`s low cost carrier Air Asia also ordered 200 Airbus aircraft last year.

“Asia has been the hot house for aircraft orders throughout the global economic downturn,” says Aviation Week`s International Editor Robert Wall. “It`s where the action is, with a widespread anticipation of huge future demand for air travel. But financing such an expansion is a worry in all this. Where will the funding come from?”

_PAGEBREAK_

According to industry watchers loss-making carriers may find attracting funds most difficult. A point in case is the fiercely competitive Indian market. “India`s airlines saw combined losses of around USD 6 billion between 2005 and the end of the first quarter of 2011,” says Kaul. “Many of them have balance sheet issues and there are also structural problems with the sector.”

CAPA estimates Indian carriers will incur a combined loss of USD 2.5 billion for the year that ends March 31, 2012.

Besides growing concerns over profitability, the timing is also not right given the current risk-aversion among European banks owing to the sovereign debt crisis, say some analysts.

But others argue that there is plenty of money in the market for buying mobile assets like planes.

“In terms of funding, we don`t foresee any problems,” says Elisa Lumbantoruan, Garuda`s Chief Financial Officer, “what we need we can still get.”

Airbus CEO Tom Enders told CNBC on the sidelines of the Singapore Airshow that while funding in general was not drying up, traditional sources of funding were. “Airlines need to look elsewhere (for funds). But there is lots of money around for mobile, efficient assets like aircraft.”

According to Robert Wall an aircraft is a moveable asset, which makes it easier to get finance. “You can always sell it to another airline, move it to another route, or even country.”

Export-import banks often step in to fund or offer guarantees that help secure funding for aircraft, say analysts. For example, Lion Air confirmed this week it would approach the US Ex-Im Bank to help fund its 230 plane order.

It has done this successfully before too, securing USD 1 billion in financing from the US Ex-Im Bank in 2009 to support an order for 30 Boeing 737-900ers.

Last year, the US Ex-Im Bank provided guarantees for about 29% of plane purchases from Boeing, according to the company`s finance arm.

While euro zone banks may be more reluctant to fund deals these days, “banks in the Gulf, Chinese banks, Japanese banks are also coming back, so there is money out there,” adds Wall.

But some airlines prefer leasing new aircraft instead of buying them. “These days it`s much better to lease,” says Lumbantoruan. “You can have a 7-10 year lease, with even early termination built into the contract, so you can provide passengers with latest planes every few years.”

For debt-laden and loss-making airlines especially, leasing planes makes better business sense. “With finance for over-leveraged companies difficult, what they`ll do is lease,” says Kaul. “They`ll do this to cover themselves until their balance sheets start looking healthier again in a few years` time.”

Copyright 2011 cnbc.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Private equity firm bets on Asia’s frontier markets

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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As investors chase yields by investing in high growth emerging markets, private equity firm Leopard Capital is looking beyond traditional economic powerhouses like China and India, to less talked about frontier markets including Myanmar, Bangladesh and Cambodia based on their future growth potential.

“Myanmar will be one of the great investment stories of 2013, it`s changing very rapidly now. This is a country, for 50 years that missed out on the whole Asian miracle,” said Douglas Clayton, Founder and CEO of Leopard Capital, which is in talks to launch a fund there.

“It is going to catch up very rapidly as the reforms take place…. everything is being changed, (from) the foreign exchange regime to the foreign investment code, and so on,” he added.

Cayman Islands-based Leopard Capital was set up in 2007 to invest in “pre-emerging” markets. The firm`s consulting partners include veteran investors such as Marc Faber and Jim Walker.

In terms of investment opportunities in Myanmar, Clayton says the firm is looking at sectors which represent the “essentials of life” including power, Internet, agriculture and financial services.

However, he notes that the lack of a stock exchange in the country means that it is difficult for institutional and retail investors to gain exposure to the market now. According to local media sources, Myanmar`s government has committed to developing a viable stock exchange in the country by 2015, and will start selling shares in state-owned enterprises this year.

Emerging manufacturing hubs

In addition to Myanmar, Clayton says Bangladesh and Cambodia, both of which are emerging manufacturing hubs and have growing consumer markets, look attractive.

“Bangladesh is one of the cheapest places to manufacture in, and as China gets more expensive, factories are rapidly moving down into places like Bangladesh and Cambodia,” he said.

In Bangladesh, the potential lies in traditionally “Indian-dominated” sectors such as textiles, pharmaceuticals, technology and outsourcing, he said. “We have a chance to `relive` the now foregone India play.”

According to Clayton, the best ways to invest in Bangladesh are via the stock market, the Dhaka Stock Exchange, which slumped over 35% in 2011, or private equity funds. Leopard Capital is currently putting together a USD 100 million fund for Bangladesh.

In Cambodia, where the company manages the country`s first private equity fund worth USD 34 million, sectors including financial services, consumer goods, power and telecom infrastructure and property, are the main focus, he said.

He said the 35 banks and 11 cell phone operators in Cambodia, most of which are international companies, illustrate the vast potential of the market.

While there is huge growth opportunity in these frontier markets, there are also risks to conducting business there, the most “daunting” being the lack of in-depth managerial experience within most of the local companies seeking capital, he said.

“Our team has to provide intensive operational support to help bring some portfolio companies up to international best practices,” Clayton said.

Copyright 2011 cnbc.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Does Germany want Greece to default?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Germany is attempting to engineer a default on Greek bonds, according to a claim in BankingNews.gr, a Greek language business news site.

Despite an outward appearance of supporting a financial rescue, the website argues, “the actual position of Germany is that Greece should go bankrupt.”

Banking News argues that regardless of whether or not Greece gets the next installment of rescue funds, eventually it will default on its bonds. The only choice is whether or not Greece defaults and stays within the euro zone or is forced to leave.

It should be noted that officially, the German government supports a rescue for Greece. The accusation from BankingNews is not sourced to any official statements or documents. It is a speculative argument.

But it is worth asking: why might Germany prefer a defaulted Greece to a rescued Greece?

One answer might be the growing awareness of the potential for a financial domino effect if Greece is rescued. One of the conditions for Greece to receive the next installment of rescue funds is an agreement from private creditors to reduce the amount Greece owes them-the so-called “private sector involvement” or “haircut.”

The trouble with the PSI is that it may set off a wave of similar demands from deeply indebted countries. If Greece can have its outstanding debt reduced, why shouldn`t other countries also get this treatment?

“The Irish are asking that question already, and I`m sure the Portuguese and Spanish will soon be asking the same thing,” writes former investment adviser Marshall Auerback at the website New Economic Perspectives.

It may be that Germany has seen the danger of a domino effect of debt reduction and is trying to avoid that.

“At some point, you have to wonder if the costs of a Greek rescue outweigh the costs of a Greek default,” one hedge-fund manager told CNBC (on the condition that he not be named). He said he was short the debt of several European nations, but not Greece.

He speculated that Germany might continue to demand ever more austerity in return for aid, declaring every possible agreement reached in Greece as unsatisfactory. Eventually, the Greek government would find itself unable or unwilling to make further budget cuts.

“In this way, Germany could force a Greek default without ever moving off their public stance supporting a bailout,” the hedge-fund manager said.

So far, all publicly available evidence indicates that Germany continues to support extending aid to Greece. But there is a certain logic to the idea that at least some German policy makers may be increasingly worried about triggering a wave of demands for “private sector involvement” across Europe.

Follow John on Twitter. (Market and financial news, adventures in New York City, plus whatever is on his mind.) You can email him at john.carney@nbcuni.com.

We also have two NetNet Twitter feeds. Follow CNBCnetnet for the best of the days posts, including breaking news. Follow NetNetDigest for a feed of every single post each day.

Copyright 2011 cnbc.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

The secret (working) lives of traders

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Professional traders, unabashed risk-takers, are often looking for the next hot opportunity not only to trade, but to own.

Many traders are entrepreneurs in other businesses outside of Wall Street and financial services. They`re leading secret lives off the trading floor, creating new ventures in varied fields from mobile apps to real estate. They`re making personal bets and garnering outside investments for businesses they believe in, allowing them to make money on and off of trading desks.

Trader Anthony Neglia has benefited from many gold trades. A veteran broker in the gold options pit at the New York Mercantile Exchange, he`s watched the precious metal nearly quadruple in price since he started his trading company 23 years ago.

Monday through Friday, you can hear his bellowing voice on the floor of the NYMEX. His “big mouth” – according to Neglia`s father – has certainly paid off.

He`s found another golden opportunity too, in real estate. Neglia runs Volpe Realty, specializing in commercial and residential sales, rentals and land purchases. He and his wife bought the business in 2007, months before the financial crisis. Neglia says “it was a calculated risk.”

As a trader, he`s no stranger to risk and says he`s been able to realize the upside in both businesse, largely because of the many similarities.

“They`re both commission-oriented businesses,” he says. “If I don`t trade, I don`t get paid, and if I don`t sell a home, I don`t get paid as well. There`s a lot of public interaction here in the commodity business and of course you`re constantly dealing with people – buyers and sellers.”

Finding the right buyers and sellers in the markets – whether it`s real estate or precious metals – is what Neglia does best.

Trader Ira Eckstein`s energy is certainly evident on the NYMEX trading floor. After a full day of trading energy futures, however, Eckstein is still going. He`s off to his newest venture, a start-up tech company.

When asked about his inspiration for this endeavor, Eckstein says it comes down to two words: “social and mobile. “A lot of venture capitalists, a lot of money and a lot of time is going into the space right now,” notes Eckstein.

That space now has a new mobile app called Venuing, which Eckstein`s company created. It allows fans to interact with each other in real-time at sporting events and other venues.

The mobile app gives fans direct access to other fans, according to Tom Stuart, chief creative officer of Venuing. And in return, sponsors and vendors for various venues – from sporting events to concerts – can have a new platform to advertise.

Product development is complete, and now Eckstein is talking to potential buyers, just as he does every day in the trading pits.

“I rode the oil wave for all these years and it was great,” Eckstein says. Now he`s riding the next wave in social media in a new company, creating a new venue of his own.

Copyright 2011 cnbc.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

China needs a hard landing to cleanse system: Fund Manager

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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After the US and Europe, China`s economy is going to be next in line for a major credit crisis and Chinese policymakers must allow a hard landing to “cleanse” the economy, Bill Smead, CEO and Chief Investment Officer at Smead Capital Management told CNBC on Wednesday.

“This cleansing is rotating its way around the world, and we`re just getting the beginnings of the problems in China. Their equity index is down dramatically. But there`s no real way yet to identify what the mark-to-market loans are doing in China. And once the light starts being shed there, that`s when they`re going to have very difficult things to deal with,” Smead said.

Smead said the cleansing, though politically difficult, was necessary if China wants to become an even bigger economic superpower.

“The irony is we think China is going to be a great and successful economy, long-term. So an economy is like an oven. If you bake very spicy foods in your oven and you don`t clean your oven, your cakes and pies and pastry start tasting like garlic and onions”, Smead said.

Smead compares China`s economic circumstances to what happened in the US in the 1800s, when America suffered 18 recessions and three depressions.

“We constantly cleaned the system… A great historical comparison for China would be that the United States built the westward railroad system in the late 1860s and the early 1870s. There was a lot of fanfare and excitement, and then for 15 years no one rode the train and the Europeans invested in those railroad bonds and those railroad equities, and they got completely clobbered,” Smead said.

“The United States had a three year, or four year, depression in the second half of the 1870s. But by 1890 we were the largest economy in the world,” he added.

Recent Chinese economic data suggest policymakers have been successful in engineering a soft landing. House prices have crept lower and manufacturing has slowed. On the other hand, inflation, which has eased to a 15-month low of 4.1 percent year-on-year in December, is still slightly above the official target of 4 percent.

According to Smead, a hard landing for China would lead to a weaker yuan. He also expects softer commodity prices, which would help both the European and US economies. In December, he told CNBC, the US was a paradise for investors.

“It should be fairly positive for the most crippled European countries like Italy… to have a substantial cut to commodity prices at the time they go through their cleansing will be helpful. For the United States, it should be the shot in the arm, the kind of stimulus that the government would like to do,” Smead said.

Smead advises investors to pay close attention to China banks for warnings signs of loans going sour. He sees a strong comparison between the Agricultural Bank of China currently and the state of failed American bank Washington Mutual back in 2008. He points out that Washington Mutual reported strong profits in 2008 even as its mortgage loans soured. On the other hand, Agbank reported record profits of 66.7 billion yuan (USD 10.4 billion) in the first-half of 2011.

Copyright 2011 cnbc.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Greek Default: Why now may be best time to do it

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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As sovereign debt defaults go, there may be no better time than now for Greece.

Global investors are clearly in risk-on mode, with the US stock market off to its best start in 15 years and equities in many emerging markets faring even better.

Friday`s job report helped assuage at least one of the primary fears regarding the US economy, even though the housing market remains a shambles-an improving shambles, but still a long ways from healthy.

Last week in general gave life to the recovery theme, with 15 of 23 indicators beating expectations and causing some economists to raise their growth outlook for the full year.

So, with sentiment running so garishly positive, why not go ahead and get that pesky Greek default and all of the accompanying futile denial out of the way already?

“In the last six months, there`s probably been no better time to let Greece strategically default than right now,” said Citigroup credit analyst Jason Shoup.

Shoup was quick to point out that a Greek debt default is not Citi`s “base case,” or most likely outcome, but one that needs to be taken seriously if the markets are ever to absorb the magnitude of Greece`s problems and come out intact on the other side.

One key reason is that the window could be small for the present enthusiasm to last.

Some economists consider the startling jobs growth-a 243,000 surge in payrolls and an unemployment rate drop to 8.3%-unsustainable and as much a product of statistical anomalies as a jump in hiring. Specifically, a revision that saw the workforce drop by 1.2 million and a consistent drop in the labor force participation served as troubling signs.

If the recent uptick in economic indicators is indeed transitory, policy makers may want to consider attacking the Greece situation now while the market can still bear it.

“Letting Greece default either after a (Private Sector Involvement) haircut or in lieu of may have been unthinkable just a few months ago, but it wouldn`t surprise us if resistance to such an idea may be weakening in the halls of Brussels and Frankfurt,” Shoup said. “Certainly, buoyant markets seem to be emboldening policymakers to take more of a hard line even while Portuguese bonds oscillate.”

Indeed, there`s the Portugal problem.

It`s hardly a secret that Greece will be only the first of several dominos likely to fall in the Eurozone sovereign structure. Several of its neighbors face burgeoning obligations that they cannot meet, and Greece`s importance as much as anything is that it will serve as a signpost for how future crises will be handled.

An orderly Greek default in which panic is limited and bondholder haircuts are contained means future defaults may not capsize the markets either. But let the crisis spread and the fallout could be catastrophic.

Bob McKeee, chief economist at Independent Stratedy, a London-based research firm, told CNBC that Portugal will be next on the agenda. The nation is far more stable than Greece, which is why the eurozone needs to address its problem children first and then work on more manageable problems.

Concerns over Portuguese debt have come since the nation`s 10-year bond rates hit their highest level since the creation of the European Monetary Union. That came after a debt downgrade from Standard and Poor`s. In a supposedly solid country with a new government, investor confidence remains a problem.

“We believe this is a sign that, despite the tentative progress made by eurozone leaders on a `fiscal compact` and increased liquidity support from the (European Central Bank), the eurozone remains in crisis,” London-based Capital Economics said in a research note.

News over the weekend that no agreement has been reached in Greece mildly spooked the markets in Monday trading.

The developments show that despite liquidity assurances through the ECB`s Long-Term Refinancing Operations, the market wants some closure on how the European crisis will be handled.

Making a decisive move at a time when global markets have stabilized and appear ready to handle shocks, and before other debt obligations in nations such as Italy come to the fore, likely will be just the right medicine.

“While a sovereign debt default in Greece or Portugal might not trigger the end of the euro,” Capital wrote in its note, “such an outcome in Italy could very well do just that.”

Copyright 2011 cnbc.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow