"Merkozy" have saved the world - shades of Gordon Brown - and the initial reaction from the markets, this Thursday morning, is positive although the "good news" has been largely factored in with the FTSE rising from an early October low of 4868 to this morning's giddy 5700.

The Greek barber's bill has been agreed with the banks at 50% and as we suspected said "agreement" means this is not a default. Try telling your bank to bin half of your overdraft - see you in court! This was another one sided arm wrestling match. From Bloomberg this morning - Sarkozy said the bankers were escorted in "not to negotiate, but to inform them on decisions taken by the 17 and then they themselves went on to think and work on it." Luxembourg Prime Minister Jean-Claude Juncker said the banks' resistance was broken by a threat "to move toward a scenario of total insolvency of Greece, which would have cost states a lot of money and which would have ruined the banks." - ie get on board there's no bailout money.