Greek risk begets more uncertainty

Investors and corporate executives are paid to calculate risk. But they cope badly with uncertainty, and the poll has swapped one big fat risk — a victory for radical leftists opposed to the bailout program keeping Greece afloat — for a fresh dose of uncertainty: what changes to the plan will be sought by Greek conservative leader Antonis Samaras, the narrow election winner, and how will the rest of the eurozone respond?

Add in sluggish growth in the United States and China, which are also in a year of political change, and it is no wonder that animal spirits, or confidence, which Keynes identified as the intangible elixir of growth, is conspicuous by its absence.

“Undoubtedly the outcome is better than it could have been, but all of the issues about renegotiations, fragile coalitions and uncertainty about growth programs are still there,” said Andrew Milligan, head of global strategy at Standard Life Investments in Edinburgh.

He said the eurozone's travails were like Britain's weather of late — dark and depressing interspersed with the odd ray of sunshine.

“Businessmen want to feel that the world economy is growing and that they should be thinking optimistically about how to expand, hire and invest,” Milligan said.

Instead, companies are hunkering down.

World No. 2 truckmaker Volvo is having second thoughts about ramping up output in Europe. “Given the current economic development in Europe, we are evaluating if the announced increases in production rates will be implemented as planned,” the company said on Monday.

Volvo was echoing another Swedish industrial bellwether, SKF AB. The world's leading bearings maker said last week that the euro crisis, coupled with a slowdown in China, was sapping confidence and demand.

Consistent with their gloomy assessments, car sales are falling not just in France but also in more-resilient Germany.

Where's the Growth?

China is easing some policies but keeping a tight grip in other areas, the United States faces a fiscal tightening next year and the eurozone is wedded to austerity, Darby said.

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