Bailout or bust
In North Korea the penalty for allegedly mismanaging a terrapin farm is a bullet from the Supreme Leader. In Europe the penalty for allegedly mismanaging a currency union is a season ticket to Brussels. It's a shame some of them aren't running terrapin farms.
The penalty for delivering poor manufacturing output data in Europe is more immediate. At least, it was yesterday for the British pound and the Norwegian krone. The two currencies shared last place with the Australian dollar after Norway and Britain reported unexpected declines in manufacturing output. The Australian dollar made no particular error: it was a sentiment sell for investors, prompted by tumbling Chinese equity prices and the effect they might have on China's demand for Australian exports.
Particularly in the Far East, investors are more bothered about the Shanghai stock index than they are about the possible break-up of the euro. The Chinese authorities are going out of their way to keep the equity price-bubble inflated, cutting interest rates and suspending trading in shares they consider to have been marked down too far. The index is still above its level prior to March but has fallen by nearly a third from its peak a month ago.
In the absence of any other inspiration, investors were inclined to park their money in a safe place. Yesterday, as is often the case, that was Japan. The yen was the unequivocal leader, strengthening by 0.5% against the US dollar and by 1.5% against sterling.
The Japanese currency was helped along by this morning's balance of payments data. Trade was close to level, with a deficit of just ¥47bn - €250m. There is optimism that the country is moving back towards a sustainable surplus after two years of consistent deficits.
Canada and the United States also reported their trade figures on Tuesday. Both were in deficit but the numbers were close to forecast and had little impact on exchange rates. Another ecostat largely overlooked by investors was the NIESR's estimate of second quarter UK growth. The institute said the economy expanded by 0.7% in Q2.
UK budget and Greece
At lunchtime Britain's chancellor will set out his second budget of the year, the first to be unfettered by coalition constraints. This evening the Federal Open Market Committee - America's MPC - will publish the minutes of last month's meeting. And the speculation about Greece will continue.
The latest deadline for Athens is Sunday, by when it must have presented its creditors with a set of proposals solid enough to allow them to recommence financial support. The European Council has scheduled an emergency meeting in Brussels that same day to consider the proposals.
In the meantime the banks in Greece will remain closed for a second week. A shortage of banknotes now apparently means there is a de facto cap of €50 on ATM withdrawals. If the money runs out before the weekend, Sunday's European Council meeting might become redundant.