Greece's horror story starts losing power to impress

One analyst likens the euro debt drama to 'the fourth or fifth instalment of a horror movie that is running out of ideas and credibility – it's Halloween 5 or Jaws IV

In Athens it probably still feels like Nightmare on Elm Street. Photograph: Allstar/Cinetext Collection

ΠΗΓΗ: GUARDIAN

Posted by

Nils Pratley

Thursday 8 March 2012 18.35 GMT

Weary of the euro debt drama? Dario Perkins of Lombard Street Research makes a fair point when he says the crisis "is starting to feel like the fourth or fifth instalment of a horror movie series that is rapidly running out of ideas and credibility. It's Halloween 5 or Jaws IV."

One suspects the crisis still feels more like Nightmare on Elm Street on the ground in Greece.

But it's true that events seem to have lost their power to impress markets. The stand-off between bondholders and the Greek government has been the story of the past fortnight but the plot seems likely to fizzle out. Assuming Greece has persuaded private holders of 67% of its bonds to accept a loss and switch into new bonds, the bailout will go ahead.

But what, actually, will have changed? In terms of the big picture, not much. The Greek government is still being told to make cuts in spending that will undermine economic growth for years. The ambition of reducing Greece's debt-to-GDP ratio to 120% by 2020 will still seem incredible. A third bailout or a bigger default and Greek exit from the euro will still be on the cards.

Lombard Street predicts the latter and asks what would happen next. Will investors attack Portugal? Or Italy again? Those possible plotlines still haven't disappeared.

As Perkins puts it, by the fifth instalment producers have to ramp up the violence and special effects.