Productive and substantive. Those were the words used by Greek officials to describe their latest talks with creditors as the country lurches toward a default. The markets have a short memory when it comes to statements from euro-area leaders, let alone Greek ones. And it has been getting shorter.
Stock indexes were initially ho-hum about the optimism from Athens. As Finance Minister Evangelos Venizelos held a teleconference with European Union and International Monetary Fund officials to discuss an 8 billion-euro ($10.1 billion) installment of rescue funds, European share indexes posted only minor gains before talk of more Federal Reserve stimulus helped stage a rally.
Translation: Fed easing trumps "productive and substantive" chatter. Traders are too busy digesting bank-capital ratios and rating downgrades to celebrate empty promises and photo-op handshakes among Europe's leaders.
"Buy on rumor, sell on fact" is the motto often cited by stock-market traders. But even the rumors are bad when it comes to the Hellenic Republic, and Greece's problems have already morphed into the world's problems.
The newspaper Kathimerini today cited unidentified sources in saying that Greek Prime Minister George Papandreou is considering calling a referendum on whether his country should deal with its debt woes by exiting the single currency. In a bid to win a fresh mandate, he plans to discuss sending a bill to Parliament in the coming days to prepare for the referendum, according to the newspaper.
If the rumor is true, it's hardly "productive" for Venizelos's continuing discussions with creditors today. And it may well be a referendum on the euro's future for the rest of its members.
Market prices reflect anticipated developments of the next 12 months, but Europe's leaders are still reacting to events of the past 12 months. While they squabble over bailout tranches for Greece, the euro crisis has already moved on to Italy, whose credit rating was cut by Standard & Poor's yesterday to A from A+, and Spain, whose borrowing costs continue to rise even as the European Central Bank purchases its bonds. Greece is looking more and more like yesterday's crisis.
(David Henry is a Bloomberg View editor.)