I wish that I had answers.  Central bank intervention in the market makes asset allocation fiendishly difficult.  Essentially, you are reduced to the voodoo that technical analysis is usually portrayed as by its detractors, there is no such thing as value investing –– it becomes a lot like Kremlinology, and about as accurate.

For the next six months, I am assuming (ha!) that the Greeks will eventually default.  Because the Eurocrats are happy to fight for the Euro to the last drop of everyone else's blood, this will probably be after at least one more bailout.  Because the French are terrified of their banks having to deal with their bad debts, they will let the Germans take charge.  Because the Germans are, in a very repressed way, upset with the short, dark, and dirty people to the south who they see as "not really European", they will attempt to force a two-tiered system on the untermench (untermenshcen?) which will, solely coincidentally, allow them to attempt to manage their own bad bank issues, but it will force the French to start writing down all of their bad debt first.  And this will give the Portugese, the Spanish, and sadly the Italians a lot of incentive to cut their debt by 75% by leaving the Euro completely.  I just don't see any of this happening quickly, just a state of constant crisis and irregular central bank intervention for the next few years.

They were talking about a year ago.

http://www.businessinsider.com/china-is-bailout-out-greece-2010-6

I found nothing more recent on google.

Very good analysis.

I want to pick your brain on Enron, and the aftermath.

A lot of that is also fraud.  The Greeks, much like the Mexicans, don't really have a functioning tax system.  As a result, taxes don't really hit the folks rich enough to pay off the taxman, but play havoc with small business.  A fair, evenly distributed tax regime could lower the Greek tax burden hugely.  That really needs to happen first.

That assumes that the Greeks, like the Mexicans, are ready to be a First World nation.

I don't think they are there, yet, in either case. Pretending something like that is "Pygmalion Economics."  If we pretend to be a First World state, we'll be one.  And people laugh at Cargo Cults. Its the same thing.

In both cases, I don't blame the middle class, such as it is.  I blame the elites.

Every time there is a thread about Greece I post this interview by Jim Rogers.
Greece is 2% of the euro economy, it should be allowed to go bankrupt.
Unfortunately in part 2 of the interview says that the US is losing more freedoms per decade and might slide into chaos because it is the worlds largest debtor nation.  He quotes Plato who says that nations tend to go in a cycle of dictatorship -> oligarchy -> democracy -> anarchy and then back to dictatorship.

http://www.youtube.com/watch?v=xDIGy6sVIUo&playnext=1&list=PL863FF8082227630B

Politicians who have sex with strippers and DON'T resign?

BTW, I think that's a good thing - we need more of them.

It's really something when you think about it....

When centralized power is forced upon people they tend to outwardly reject it, but if you do it through political means & use a crisis to justify it, then the sheeple tend to think its okay.

It's a almost like the difference between rape & seduction. The same goal is accomplished either way, but the method is far different... and in the end, either way, the people get fucked.

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She approves this publicity!

It may no longer be called Greece in Sept



 

I doubt they'll be chained to radiator somewhere, but spending a honeymoon in the Athens Airport Hilton because the rest of the country is on strike isn't that romantic.

exactly


it will be interesting to see if they will actually be forced to leave the EU after that has happened or before. Nobody wants to get into more debt for Greece if they are not wiling to make changes. My guess is that others will follow and also default.

perhaps the DM will come back

This is the problem. I see the people of Greece just saying " screw you" to their Gov." We aren't going to take the cut's you propose for the bail out." As our gov being one that will print more $$ to help with that bail out I don't want them to be bailed out. Greece is not showing it's ability to be a good investment.

On to U.S.  We aren't being very comforting debtors when we keep running our debt limit up. Think China is noticing? Yes, they just sold most short term U.S. bonds. What will Greece face if they aren't bailed out? Reality! What will happen? Riots for sure. Then after the dust settles they will have to deal with reality. They will have to live within their means. They might get the boot from the EU currency wise. Why is this bad and might cause a ripple effect? Because most of the world has been borrowing money to sustain it's socialist ponzi scheme. U.S. included. Greece is showing signs of AIDS and the rest of the world had sex with her last week! (poor analogy maybe) This is the real problem folks. The world moneymen are close to having the ponzi scheme revealed on a large scale. When that happens the disease can spread, and spread fast. That could cause some major unrest world wide. I think the good thing is that if a world bank calapse happened it might make for some better system to come along, like a one world currency.(just kidding, some won't be) I hope not. What I do hope is that a less centeralized system might come about where a currency was rated on it's value like in the old days. In other words it was backed. Not neccessarily by just gold/silver, but of the GDP capabilty of its people and resources, and it's quality of fiscal responsibility.

Greece is suffering from a self inflicted wound, so is the U.S. The question is, would you lend money to a suicidal man? That is the EU is asking about Greece, and China is starting to ask about U.S.

Interesting points. I guess we will all have to stay tuned to see what happens next.
Ten points on the Euro crisis

Bingo, we have a winner.  Loaning Greece money to pay off debts from other loans they cant pay is something only a Govt could rationalize.

Three problems...

1) The EuroZone must save Greece.  They cannot allow it to fall.  The euro will take a huge hit, European banks will take huge losses, the eurozone will fracture... and the market will then turn it's attention to Portugal, Ireland, Italy, Spain, Belgium...

2) The EuroZone cannot save Greece.  The debts are simply too big, and the Greek population will never accept the huge hit that the necessary austerity measures will exact from them.  They will not sit by and watch a huge chunk of their GDP go out to repay the debts incurred, either current or new debt to the ECB.  They'll vote the bastards out, like in Ireland.  And if the new government, like in Ireland, turns around and sticks it to them again, they'll recall that government, or shut the country down with strikes and protests... or pick up rifles.

3) It doesn't matter if Greece is saved.  Even if Europe completely blows their load, takes on every cent of Greek debt, and discharges it... the market will simply turn to Portugal, Ireland, Italy, Spain, Belgium and turn the heat up on them.  And the debts only get bigger.

IMO the Eurozone is done.  It was always a bad idea to have a unified monetary policy among a variety of very different sovereign nations.  "They" really should have spent another twenty years breaking down that sovereignty first, and get people more used to being "Europeans" instead of Greeks, French, Germans, Italians, etc.

WHAT WE NEED TO WATCH OUT FOR:

A lot of US politicians, including Republicans, are globalists.  They believe we must remain part of the IMF and "contribute" whatever is necessary to "save" the euro.  Because the collapse of the eurozone will take a bite out of the world economy, and we'll feel that.  But look up your Representative and Senators, and send them an email telling them you oppose further US involvement in the IMF, you oppose US financial contributions being sent in a doomed attempt to save Europe, we have enough of our own problems here, etc.  See what they say.  These people will beggar us to try to save Europe, just as German taxpayers are being told now that they must ante up to "save" the debtors of the Eurozone.  And it would be one thing if Europe could be "saved" and stabilized, and our money would be repaid, and we could all hold hands and sing kumbaya.  But we can't.  And even if we could... none of that addresses our debt problems.

I do not believe in "isolationism", but I do believe we should throw up a ring fence between us and the rest of the world in financial / economic matters.  We should see to ourselves first, save ourselves, and then worry about doing what we can to help them.  But you do not continue to inject pricey antibiotics into a gangrenous limb... you cut that limb off and save the body.  Europe should have done that with Greece a year ago.  Kicking Greece out would have had the rest of the PIIGS scrambling to set their houses in order without outside (IMF / World Bank / ECB) "encouragement".  Instead, the message is kick the can down the road, don't worry, nobody needs to feel any pain, all is good... just extend and pretend and delay...

No, it's more like the guy who's bleeding out is surrounded by other people who are hemorrhaging, and someone else is demanding that everyone else must give blood to the first guy.  On top of that, they refuse to demand that the open veins be staunched, sewn up, or cauterized... they say we must keep pouring blood in to keep him alive, even though it all runs back out onto the ground.

And even if they manage to save that first person... there are a dozen more, all bleeding, all needing "saving", and nobody is willing to actually stop the bleeding before starting the transfusion.  "That takes too long, we cannot possibly make these demands, these people need blood now!  It doesn't matter that it all runs right back out again... keep pumping!  Stop your bitching, you aren't going to die, he's worse than you, and don't worry... you'll get your turn, too."

Canary in the coal mine. IIRC, the US's debt as a percentage of GDP is actually higher.

Back to Greece, Might be part of the deal of booting Greece out of the Euro zone is to take on part of the debt load.

Drachmas FTW!

The German people are sick of it.  The German government was, but is no longer.  Merkel now supports bailouts.  She wants her cushy ski vacations in Davos while the rest of Europe burns.

But when Greece goes, so go a lot of German banks.  And the German people won't be happy about that, either.

It would be... interesting... watching German tanks and soldiers, spreading across Europe, enforcing the will of Brussels.

Except they can't do it any more.  I don't think anyone, except the US, honors their defense spending requirements to be in NATO (just like they never honored their debt / spending limitations to be in the Eurozone )

We might well see "NATO" (read: the United States) called upon to "quell uprisings and maintain civil order in Europe"

US banks, too.

Part of TARP wound up sending money to foreign banks that owned stakes in AIG, for example.  Washington will support Greek bailouts because JP Morgan and Goldman Sachs own chunks of European debt.  And a Euro-denominated default will badly hurt the value of those holdings.

What's coming will basically be the bankers vs. everyone else, and the bankers telling the governments that they had better take the "right" side, and the average citizen saying, "No more."

I'd be interested in knowing how many (if any) US banks/insurance companies have written credit default swaps on Greek debt or any exposed banks like SocGen.  

Allowing Lehman's collapse is one of the biggest blunders in US economic history.

They're just hoping we crash our economy first... the resulting global economic meltdown will make theirs seem insignificant....

hell, they might be right.

...The IPSC World Shoot is in Greece in October....at least the people I know who are going will be armed and have plenty of ammo.

2010 Federal expenditure was about $9.7 billion per day.   41 billion is still a bit over one percent (1%) of the total.   But if we start handing out a percent here, a percent there - it adds up quickly.

(and never mind the fact that our budget DEFICIT is over $3 billion per day).

Sweet! And in the bayous of Louisiana where people live on venison, wild hog, bream and catfish, not a single fuck will be given that the Socialists of the world are sliding into the abyss.

The culture of tax cheating is deeply ingrained. I think it will be hard to get rid of it. There aren't really any cultural sanctions against it at this point; you're viewed as kind of a chump if you do pay taxes.

A lot of capitalism depends on people behaving ethically. If the ethics are gone, the economy quickly becomes a grab-what-you-can affair.

Until we start feeling the consequences of a global economic incident here, that is....

(Greece by itself may or may not cause such a global event, but if it's followed by Ireland, Portugal, Spain, etc., the domino effect could kick the legs out from under our struggling economy –– especially since we're currently holding a gun to the head of the security of our own economy.  At that point, the whole world is fucked.)

Even technical anaylsis is essentially paralyzed.  The mood of the herd is not in the market.  It is FED and algo driven.

Ok, what I know about economics could fit into the period at the end of the sentence.  That said, I thought there pretty much already was a two tier system.  I though Greece, Ireland, Portugal, and Spain were in such trouble because they had no say in the way the EuroZone was currently run.
Are you saying that Germany, and to some extent France, would then run Greece's economy as a subsidiary?

there is and always has been a structural problem with the euro and the euro zone. its sort of a macro version of the us economy in many ways..

is like this, you have a country like greece or portugal who isnt as productive as germany for instance. so you form up an economic union without the the political coordination to impose some semblance of monetary sanity across all countries. so greece ends up being on the 'dole' from countries like germany. the euro buys the same thing everywhere, but in greece, they work less to get the same stuff as the germans who work like dogs (and are pretty pissed at the surrounding welfare countries).

i dont see how it can last, unless the producers nations just buckle down and decide the support the slackers for eternity. and with nationalism playing a part in europe that might be difficult.

in amerika the hard working folks support the slackers, but their isnt much to separate the slackers (such as national identity) from the producers. but its somewhat similar.

those who work in the world are getting tired of supporting the slackers. but those who are in control and receive some of the control from the slackers want to keep the fail train on the tracks.

Tag

Hit the nail on the head...awesome!  Sums up what we are all thinking.

The French and the Germans may bail them out (in order to defend their own banks that bought Greek debt), but so what? The populace won't put up with austerity. They want their gubment feta cheese. When they run thru that money, RESET, there they go again.

The IMF has a package on the table, but the Greeks are required to meet certain conditions. Only, the politicians know it's suicide (maybe literally) to attempt to meet the requirements.

Let's say they do what the IMF demands. Their economy goes in the shitter. Tourism is their main gig. Who wants to travel to Greece and drive past piles of garbage that rival Olympus? The place stinks in the best of times.

In my mind's eye, I can see them doing this one weekend, without telling anyone.  Everyone in my vision looks Barvarian, is mostly bald, at least 50, with out of control eyebrows, and they already have the printing plates in a safe in the back of a butcher shop in a butcher shop that specializes in white sausage, somewhere in Berlin, just in case.

The EU was doomed to fail the day it was created....

Fuck socialism, fuck big government, and fuck Obama.

What is this "bream?"

I thought they got caught recently doing this?

Except, I don't feel like I came from the same country as the slacker class......   I don't think I have anything in common with them....

41 billion is pretty hefty amount even for our spending standards. It probably took the printing presses 3 days to create all that paper.

Want to know as well......

Where the hell have you been?

Seeing as they have a history of it. Yep.





Although I see a 'restructuring' rather than a straight up default.  Same thing mostly, but more palatable wording.

So you think the Euro will survive?





Even if Greece defaults?





I think it most likely will.   Long term though, one or two countries might leave the Euro.  Italy being most likely.

Fuck.