Nervousness Grows (Again) About Greece

Greece hasn't quite signed off on the conditions that would allow it to receive more bailout money and thus pay its near-term bills.

How an economy the size of Maryland’s can, in some important ways, hold the rest of the world’s economies hostage is a puzzle for future historians to work out. Yet for the moment it seems to be the case: Greece, reportedly so close recently to agreeing to a deal with its creditors and among its own political parties, hasn’t quite signed off on the conditions—more austerity—that would allow it to receive more bailout money and thus pay its near-term bills. Monday was supposedly the deadline for a deal, but now it’s Tuesday.

The Greek government, often described as “technocratic” and theoretically apart from political considerations, is under intense political pressure to do the deal from both the “troika” of creditors—the European Union, International Monetary Fund and the European Central Bank—and the boss nations of the euro zone, Germany and France. The Greek government is also under intense pressure from the Greek population not to do the deal, or at least not the parts that would require austerity. Elections are in April.

If the deal falls through in one way or the other, the bailout funds won’t be distributed; and if that happens, Greece will be unable to pay its creditors (March 20 is the deadline for that). That would amount to a default by the country, a first for any euro-zone nation, and with unforeseeable consequences. Greece might eventually be better for it, since its economy can hardly be worse: the country contracted an estimated 6 percent in 2011. As for the rest of the world, a hard default would certain panic investors, throwing Europe into recession. As for the impact on the U.S. economy, all bets would be off.

Conference Board Employment Trends Index up

The Conference Board said on Monday that its Employment Trends Index increased 0.73 percent in January to 105.81, up from the revised figure of 105.04 in December. The January 2012 reading is also up 5.9 percent from the same month a year ago. The strength of the index was due to positives in half of its components, according to the organization. The improving indicators included Percentage of Firms With Positions Not Able to Fill Right Now; Number of Employees Hired by the Temporary-Help Industry; Industrial Production; and Real Manufacturing and Trade Sales.

The recent upticks in the index may or may not translate into something more lasting, however. “The Employment Trends Index has been improving rapidly for four straight months, suggesting somewhat more robust job growth is likely to continue in this quarter,” Gad Levanon, director of macroeconomic research at the Conference Board, noted in a statement. “Beyond that we still remain cautious. We expect sluggish growth in economic activity in the first half of 2012 and therefore we do not foresee the strengthening of the labor market to be sustained in the second quarter of 2012.”

CRE prices level off

Green Street Advisors reported on Monday that its Commercial Property Price Index didn’t budge in January. After a rally in prices during the years following the worst of the Panic of 2008, CRE valuation has effectively plateaued, according to the consultancy. The most recent peak in CRE valuation, which was in August 2007, is indexed at 100 under Green Street’s scheme; as of January 2012, the index was at 91.7, or not vastly below the most recent peak.

“Commercial property values are effectively unchanged since last summer,” said Peter Rothemund, an analyst at Green Street Advisors, in a press statement. “The low-return environment was the primary catalyst for earlier gains, and although it’s still here, an uncertain economic outlook has held back gains for now.”

Wall Street nervously hemmed and hawed on Monday, seemingly worried about the situation in Europe, eventually ending down slightly. The Dow Jones Industrial Average lost 17.1 points, or 0.13 percent. The S&P 500 and the Nasdaq were down 0.04 percent and 0.13 percent, respectively.