The wine dark sea

Unbelievably, there is still somebody who does not know what 's happening in Greece... or shall we say who has not heard the news of market turmoil, fiscal crisis, bonds prices collapsing, S&P downgrading them to junk, europe and IMF maybe riding to the rescue, or shall we say talking about it.

In fact we should say none of us knows what's happening in Greece. We know the news, we read the statements of politician and technocrats, we see the protests on the streets, we see the plots of bond yields and CDS spreads. But if we are honest: we do not know what is going to happens. And that matters: because if the bailout works, it will inject a wave of optimism, at least short term, that will drive bond yields down, equity markets up, and makes us all feel like we are in the best of all possible worlds. If instead the bailout is delayed, maybe because of social unrest in Athens, then its bye-bye and thanks for all the fish.

While we wait for that outcome, and it might be a long wait, let's expound platitudes, stereotypes and cliches.
For example: the Mediterranean is a dark wine sea. The people on its shores are more similar than different ("una fazza una razza").

This is why it matters (plot courtesy of IB):
it starts two weeks ago, rescaling so the two lines starts at the same point.
The blue is the bund,  i.e. the future on the 10 years german government bond.
The white is the future on the BTP (the 10 year italian government bond).
This is a way of saying "contagion" with a picture.
Now of course nothing will happen to Italy. The deficit is at 5.2% of GDP, while Greece is >13%.
Nothing will happen, if that 5.2% number is correct, and no serious off-balance sheet exposures, accounting tricks or frauds emerge. We have to hope not. But looking at the plot, somebody in the markets is beginning to get worried.

On regulatory reform

The big banks are making squealing noises about the proposed financial regulation bills in the senate, complaining that it would hurt them seriously and that more time needs to be spent pondering (notwithstanding that 2 years have already elapsed).
The reality is that the bill in the senate, and most of the other proposals being evaluated internationally, hardly address the real issues, and hardly hurt the monopolistic banks.
Check this out, from Reuters:
Wall street gives much to lawmakers in the reform debate