THURSDAY MAY 20, 2010

Disbelief

The Euro continues to fall, the dollar strengthens and U.S. interest rates are falling to yields not seen since November of last year.  The market is concluding that the $1 trillion Greek bailout may not be sufficient to solve Europe's debt problems.  The markets doubt Europe's resolve to make and sustain the necessary austerity policies.  And I think the market is right.  The bailout is delaying the inevitable, which is a Greek default on its bonds.

Why do I feel this way?  The Greek Ministry of Finance is charged with establishing the austerity measures that are most necessary if Greece is to avoid default.  One of their first actions was to change the overly generous pension rules.  Right on cue, today the Greeks are staging an economy wide "strike" to protest these pension reforms.    And this strike includes...all the workers at the Ministry of Finance!  No wonder the markets don't believe Greece can get its act together!

POSTED AT 1899-12-30 09:44:00.0

KEN ENTENMANN, CFA
SENIOR VICE PRESIDENT AND
THE DIRECTOR OF INVESTMENT MANAGEMENT SERVICES

Ken is a Senior Vice President and the Director of the Trust and Investment Services at Alliance Bank, N.A. He has 23 years of investment experience and oversees the management of assets totaling $1 billion. He holds a B.S. in Applied Economics and Business Management from Cornell University and an M.B.A. from the William E. Simon Graduate School of Business Administration at the University of Rochester. He has also earned his Chartered Financial Analyst designation. He is a member of the Executive Committee of the Trust Division of the New York Banker's Association. He is also a director of the Central New York Community Foundation.

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