Greece

[samclem]

The Economist has a well-written and concise (as usual) recap of the Greek situation (here), written just prior to the Greek decision not to open their banks tomorrow. Things are changing quickly, and it appears that the thing the Greek referendum is about (to accept EU austerity measures in order to gain more support from the EU) is not even on the table anymore.

In part:

After having insulted his euro-zone partners last night Mr Tsipras said he would ask them for a "short extension" of Greece's bail-out, which expires on June 30th, to cover the period of the referendum. At their meeting today, finance ministers outright rejected that suggestion. Without a radical change of direction from Mr Tsipras, therefore, the bail-out will expire on June 30th, along with €16.3 billion in potential bail-out support, and Greeks will be voting on a defunct proposal. The meaning of a "yes" vote will be impossible to divine.

But, the good news: Investors can get Greek 3 yr Treasury bonds that yield over 20%. The bad news: They'll be paid in "New Drachmas" physically available in attractive Greek coins made of a very attractive zinc/Bakelite alloy.

 

[Nemo2]

Within the first 24 minutes of trading today the Australian stock market is down 1.98%

 

[JoeWras]

In Italy, some businesses will shake their head if you try to use a card, especially on a small transaction, or say their terminal is broken, or just ask for cash.

Of course the Italians are also known for tax evasion.

I've gotten to asking restaurants before I sit down or order whether they will take credit cards. I think they get the hint that if they say no, I may go elsewhere or not order as much.

Yes, this describes Greece well too.

 

[samclem]

Watch what Russia does here. Putin will not miss a chance to stick a thumb in the eye of Europe even if it costs his kleptocracy some resources it can ill afford to part with. It's a situation made for him.
He'll offer Tsipras something, and Tsipras will take it to spite Brussels, and to demonstrate to the public that they don't need those who are "trying to humiliate the Greek people."

 

[NW-Bound]

...This has been such a slow moving drama, I don't know why any moderately intelligent citizen wouldn't have taken all of their money out of short term checkings and savings months ago...

Complacency or inertia, I guess. Plus it is human nature to be optimistic, to think that things will work out somehow, some way. People keep shaking their head, saying "Nah, no way it could get that bad". That attitude happens time and time again through history. Not just in financial crises, but when wars or revolutions broke out, some people are still in denial mode till the end.

 

[imoldernu]

$14.4 Billion in Hedge funds poses the first real test of liquidity and resolution at this level.

There's panic among hedge fund investors in Greece | afr.com

But the question of what happens when the markets do open is particularly acute for the hedge fund investors - including luminaries like David Einhorn and John Paulson - who have collectively poured more than €10 billion ($14.4 billion) into Greek government bonds, bank stocks and other investments.

Through the weekend, Nicholas Papapolitis, a corporate lawyer here, was working around the clock comforting and cajoling his frantic hedge fund clients.

"People are freaking out," said the 32-year-old Papapolitis, his eyes red and his voice hoarse. "They have made some really big bets on Greece."

But there is no getting around the truth of the matter, he said. Without a deal with its European creditors, the country will default and Greek stocks and bonds will tank when the markets open.

Actually more than $30B... Big gains on the way up... margins and liquidity will separate the winners and the losers. A rocky road ahead. Some won't sleep well tonight.

 

[JoeWras]

If I had to negotiate with Tsipras, I would probably fall on a knife and get it over with to put me out of my misery. Reminds me of my neighbor who blamed the bank for giving him a loan he couldn't pay.

Even though his party won a majority, not every Greek is in love with this guy. One of our cab drivers gave us a monologue on him, calling him a crazy communist.

Of course when our ride was done, our cabbie asked for cash only, please.

 

[Lakewood90712]

Wonder if George Soros is going to be shinny side up. Haven't herd anything , but I'd be surprised if he doesn't have big positions involved.

 

[Jack_Pine]

Maybe it's just me but I am so tired of the Greece delay thing. Do what you are going to do, let's let the markets react and move on.

BTW Greece, LBYM.

 

[Texas Proud]

I find it interesting to read that the Greek finance minister was talking about how the Euro Zone is not allowing the democratic process to work by letting them have a vote on the matter....

Well, maybe if you had not let it get to the very last days to call such a vote you would have more time...


I wish I had kept a chart that I saw today... it was a view that told everything in one chart... the guy showed the Greek economy had dropped the last few years.... and big time... but the chart also showed the long term Greek economy and it was getting down to it long run growth... IOW, they had a big bubble these last few years and it burst... now they are back to where they should be....

Nope, I do not have any sympathy for the Greeks.... maybe for the ones who will be hit the hardest by this and had no clue... but that would be a small minority...

 

[Meadbh]

I agree with the last two posters. This has been decades in the making. Tax avoidance and corruption is endemic in Greece. Tsipras is trying to bully the EU and IMF into prolonging the agony by pouring money into a bottomless pit. Time to stop enabling Greece.

 

[Texas Proud]

I haven't heard this about Greece. I'd be curious to know where you read this if you remember?

OK... did a search and found a few articles about the possibility of Greece leaving the EU... these were not the site I read it the first time, but do not remember where it was....

Greece could exit eurozone and EU, Greek central bank warns - ABC News (Australian Broadcasting Corporation)

Its central bank has warned for the first time the country could crash out of the eurozone, and even the European Union, if it fails to achieve a result.
In a stark warning, the Bank of Greece said: "Failure to reach an agreement would ... mark the beginning of a painful course that would lead initially to a Greek default and ultimately to the country's exit from the euro area and — most likely — from the European Union".

​

Greece likely to exit euro and EU without deal with creditors ? central bank ? RT Business

Athens is likely to leave the eurozone and the EU if it fails to reach an agreement to unlock a €7.2 billion bailout installment, said a statement from the Bank of Greece.
​

 

[ERD50]

Is Greece just the 'canary in the mine'? I recall hearing about the PIGS (Portugal, Italy, Greece, Spain). So is the market responding not just to the relatively small Greek economy, but to the sum of the PIGS?

-ERD50

 

[Texas Proud]

Is Greece just the 'canary in the mine'? I recall hearing about the PIGS (Portugal, Italy, Greece, Spain). So is the market responding not just to the relatively small Greek economy, but to the sum of the PIGS?

-ERD50

IMO, they are not going to let Greece off the hook to keep the others in line.. they do not seem as bad, so just let Greece go to save the others...

If they do another haircut on Greek debt, they will be expecting their turn...

Reading a bit more.... the Greeks got a 107 billion euro debt relief at the beginning of their crisis... and now a few years later want more...

 

[springnr]

I wish I had kept a chart that I saw today... it was a view that told everything in one chart... the guy showed the Greek economy had dropped the last few years.... and big time... but the chart also showed the long term Greek economy and it was getting down to it long run growth... IOW, they had a big bubble these last few years and it burst... now they are back to where they should be....

The chart and article were on Vox
This chart explains why Greece and Europe can't agree - Vox

 

[Alan]

Is Greece just the 'canary in the mine'? I recall hearing about the PIGS (Portugal, Italy, Greece, Spain). So is the market responding not just to the relatively small Greek economy, but to the sum of the PIGS?

-ERD50

Actually it is the PIIGS(Portugal, Italy, Ireland, Greece and Spain). Ireland has already taken its medicine and is well on the way to recovery so I doubt they will be too sympathetic towards Greece.


Ireland eyes lower deficit, quashes EU bank debt deal | Reuters

Noonan said on Tuesday that far fewer spending cuts and tax hikes would be needed in the last in a long line of austerity budgets next month after the government collected 1 billion euros ($1.3 billion) or over 4 percent more tax than expected in the first eight months of the year.

 

[Lakewood90712]

The bank shutdown is supposed to last 6 days, with a withdrawal limit at atm's until the bank's re-open.

Could the Greek banks actually run out of paper currency if the run on the banks continue when they re-open ?

Does the European central bank supply all the paper currency , or do the countries print their own euro's ?

 

[2017ish]

And, Puerto Rico slides in under the Greek News Barrage:

Puerto Rico’s governor, saying he needs to pull the island out of a “death spiral,” has concluded that the commonwealth cannot pay its roughly $72 billion in debts, an admission that will probably have wide-reaching financial repercussions.

http://www.nytimes.com/2015/06/29/b...ernor-says-islands-debts-are-not-payable.html No surprise, but they do have a ton of municipal bonds outstanding in the US.

 

[MichaelB]

I agree with the last two posters. This has been decades in the making. Tax avoidance and corruption is endemic in Greece. Tsipras is trying to bully the EU and IMF into prolonging the agony by pouring money into a bottomless pit. Time to stop enabling Greece.

If this is true (and I have no doubt you are correct), Greece should never have been admitted to the EMU. The "problem" is one decade and a half in the making, and the EU leadership must now share the responsibility.

 

[Meadbh]

If this is true (and I have no doubt you are correct), Greece should never have been admitted to the EMU. The "problem" is one decade and a half in the making, and the EU leadership must now share the responsibility.

That's true too.

 

[pb4uski]

....Oh and this, Dow futures off by over 320 points, S&P by 40 points, NASDAQ by over 70 points Sunday evening.

Should be an "interesting" day.... NIKKEI 225 and Hang Seng were off 2.88% and 2.61%, FTSE, DAX and CAC were off 1.43%, 2.5% and 2.93%.

And U.S. market futures are off a tad over 1% but not quite as bad as when explanade posted the above.

 

[eytonxav]

The problem here is even if a deal is reached, the greek drama will resurface on an ongoing basis until greece decides to address its structural problems, which they do not show any desire to do. Let the monkeys default, so everyone can move on. I suspect that enough measures have been put in place, so that a default will not have the catastrophe and contagion that would have existed a few years ago in the other pigs.

 

[JoeWras]

Actually it is the PIIGS(Portugal, Italy, Ireland, Greece and Spain). Ireland has already taken its medicine and is well on the way to recovery so I doubt they will be too sympathetic towards Greece.
]

Glad you brought up Ireland. At least they are trying to do something with their economy. The thing that struck me when over there was the waste of their highly educated youth. They all speak perfect English (required second language in school) and most go to college. Greece could play a part of the high tech world much like Ireland has been able to do.

But they do not. I don't know all the complexities of why this is so.

But here's an irony. Our tour leader's two kids both moved out of the country for work. One of them went to Ireland for work. piigs or not, the opportunity was better there.

There is also a lack of multi-national investment, for whatever reason, although I understand the USA loves Greek made razor blades.

But there has to be more than olives and razor blades. Those young smart minds are just being wasted.

Final thought: we speak of LYBM and frugal living. I have to admit that watching the easygoing live-life-to-the-max attitude while there was a bit infectious. I could see it could become habit blowing money on late night dinners and bar hopping. Everyone seemed to do it.

 

[explanade]

Cramer brought up an interesting angle.

If Russia and China bring economic aid to Greece, as they are doing in Venezuela, Greece may leave NATO, which sounds unthinkable but Russia is preoccupied about NATO encroaching on its sphere of influence so getting Greece to leave NATO would be big.

Then does Merkel want to be known as the German chancellor who lost Greece out of NATO?

 

[MichaelB]

Cramer brought up an interesting angle.

If Russia and China bring economic aid to Greece, as they are doing in Venezuela, Greece may leave NATO, which sounds unthinkable but Russia is preoccupied about NATO encroaching on its sphere of influence so getting Greece to leave NATO would be big.

Then does Merkel want to be known as the German chancellor who lost Greece out of NATO?

Russia and China have economic interests in Venezuela but it is certainly not aid and the primary beneficiaries are to be found in Russia and China. It's not clear how well informed Cramer is on this.