Greece

[Fermion]

I don't own bonds (have a couple years expenses in cash) but I do own heavily covered call dividend stocks.

If it just stagnates within 1000 points of this level I come out pretty well on their Jan 2016 expiration while I collect the 2% to 4% dividends.

The temptation will be to invest some of our cash. It has been very hard keeping $100,000 out of the market...

At DOW 12,000 it might become irresistible.

 

[NW-Bound]

I have a lot more than $100K in cash, several times that in fact. But will I be able to go all in? I was not able to in 2008-2009, so will not talk tough now. Some of the cash is in I-bonds, which I do not want to part with anyway. But a couple of 100G's is doable, if and when it feels right.

 

[NW-Bound]

Come to think of it, say the market drops 10% or 20%. You plunk down $100K, then the marker recovers. So, you get a gain of $10K or $20K. It surely is nice to have any extra money, but is it a life-changing amount, or just for a really nice foreign vacation?

To really have it good, you've got to put down 5x or 10x that amount. That means you have to sell high to raise a lot of cash when the market is high. That's not easy to do.

The time when the market dropped 50% like in 2003 and 2009 was really the time to make a killing. And I was too afraid to go all in.

 

[robnplunder]

Simply put, beggars can't be choosers.

 

[Fermion]

Oh, I forgot about I-bonds. We have 30k of those which are paying a generous 0.0%. I could definitely afford the 0% penalty to convert those to stock if offered a great deal.

We are also selling our house this year and doing what you only speculate, NW...boondocking on gubmit land for near free. That house sale will be all cash since there is no loan.

I had been trying to figure out what to do with the money while the stock market was in the 18,200s and not a lot of bargains. This GrecoRican event might be just the ticket to better bargains.

 

[Fermion]

To really have it good, you've got to put down 5x or 10x that amount. That means you have to sell high to raise a lot of cash when the market is high. That's not easy to do.

The time when the market dropped 50% like in 2003 and 2009 was really the time to make a killing. And I was too afraid to go all in.

Taking the risk of individual stocks was the real time to make a killing. LVS went from a buck to $50 a share.

 

[NW-Bound]

I have not had any stock that went 50X, though I have had 5X, not that I stayed in for the entire run. And then, I stay diversified and never have more than 2% in any single stock. Also, I tend to sell too early. A lot of "woulda, shoulda"...

PS. By the way, I "lost" 4 months of living expenses today.

 

[eytonxav]

Makes me hope the US will see this as an end when a country fails to fix its structural problems (and I'm not talking roads).

 

[HFWR]

I believe it was Churchill who said that America will do the right thing, after all other possibilities have been exhausted...

 

[eytonxav]

Failing to do the right thing in a timely manner is the issue.

 

[Nemo2]

​

Failing to do the right thing in a timely manner is the issue.

Has 'the right thing' even been identified?

 

[eytonxav]

​

Has 'the right thing' even been identified?

I presume its known to many except the politicians. The biggest one is spend $s within or below your means. We know that one pretty well on this forum.

 

[marko]

"We want austerity to end so we can return to Greece and find a job."

Oh, so THAT'S how it works!! Talk about drinking the Kool-Aid!

 

[NW-Bound]

I read that Greece debt is 320B Euros, 240B of that was pumped in by lenders since 2009. So, no wonder they don't want to throw more money into the sink hole.

The above number is 180% of their GPD, and works out to US$32K per person.

Our US national debt is US$18.3T or US$57K per citizen. It's a bit more than 100% GDP. So, the debt load is a bit more than 50% that of Greece.

Another difference is that Greece has to pay a higher interest rate than the US. One thing noteworthy is that they had some good years with low interest rates, and got carried away with borrowing more. Now, they cannot even service the interest.

 

[Totoro]

Is that important to Merkel or EU or even to NATO? I don't think it is or matters that much.

Merkel grew up in Eastern Germany, the EU project is about more than finances.

For some letting go of Greece would be similar to remove California or Texas from the USA.

 

[explanade]

Greece has been cutting its govt. programs including pension payments.

So with the country in greater recession than the Great Recession, it's making less money and collecting less in taxes.

The austerity measures prevent reducing spending relative to income. It's a vicious circle, the more they cut, the less tax receipts they get and are less able to fund the govt. and pay the creditors, who are making them cut.

 

[marko]

I read that Greece debt is 320B Euros, of that 240B was pumped in by lenders since 2009. So, no wonder they don't want to throw more money into the sink hole.

The above number is 180% of their GPD, and works out to US$32K per person.

Our US national debt is US$18.3T or US$57K per citizen. It's a bit more than 100% GDP. So, the debt load is a bit more than 50% that of Greece.

Another difference is that Greece has to pay a higher interest rate than the US. One thing noteworthy is that they had some good years with low interest rates, and got carried away with borrowing more. Now, they cannot even service the interest.

Yeah, BUT! They've got great food, great weather, great beaches and lots of free time to enjoy all of that! "Economy, schmeconomy! Sit down have some Astakomacaronada (lobster and spaghetti), it'll all work out!".

Here in the US, we're all nose to the grindstone while life passes us by.

(Not sure if the above is sarcasm or envy)

 

[ERD50]

Greece has been cutting its govt. programs including pension payments.

So with the country in greater recession than the Great Recession, it's making less money and collecting less in taxes.

The austerity measures prevent reducing spending relative to income. It's a vicious circle, the more they cut, the less tax receipts they get and are less able to fund the govt. and pay the creditors, who are making them cut.

So the obvious solution - increase programs and pensions so everyone is up to at least middle class income, job, or no job. Just enforce that the money must be spent and taxed. It'll pay for itself!

Do you think Greece could borrow more money with that plan? Would you loan money to someone who promised to improve your status by spending it all so that your share of taxes are reduced, and he will help grow the economy, and your portfolio will benefit?

Hmmmm, I think 'productivity' must be inserted in to that vicious circle, so that it can spiral UP, and not just DOWN.

-ERD50

 

[redduck]

I was thinking that maybe if Greece switched over to the Bitcoin all their problems would be solved (at least for awhile). I went to Google to see if Bitcoin was one or two words (it was two) and as a bonus I learned that Bitcoin starts with a capitial B. So, I learned two things. But, actually, I learned a third thing: There was an CNN article about some Greeks (it didn't say how many) who are already investigating the Bitcoin angle.

However, the article listed a few downsides to having Greece adopt the Bitcoin:
"...There aren't many ways to spend them in Greece anyway. According to one publicly maintained registry, BitcoinMaps, there are only half a dozen spots in Athens that accept Bitcoin as payment. Among them: a family restaurant called Angel Tavern, a head-and-neck surgeon, and a yacht rental company."

Six business that accept the Bitcoin in Greece--it's a start.

 

[samclem]

Hmmmm, I think 'productivity' must be inserted in to that vicious circle, so that it can spiral UP, and not just DOWN.

No, we foolishly used to think that productivity was the only thing that ultimately produced economic growth (and was the only basis for improved standards of living). Now we know better--it's all about Keynesian stimulus, the "multiplier", and public sector spending. It's a perpetual motion machine, and nobody has to actually apply creativity or labor to increase the value of anything to make it work.

 

[eytonxav]

Greece has been cutting its govt. programs including pension payments.

Perhaps they should try something innovative, like bringing their retirement age to something that corresponds with other euro countries or even the US heaven forbid.

 

[explanade]

They should just leave the Euro.

As for govt. created jobs, across Europe, govt. is a big part of the GDP. They can't simply will big private sector employers to appear out of thin air. Some of the most successful big businesses are former state industries, like telecom and big energy companies. Not sure if there are more big state industries to privatize any more.

However, a few years ago, someone suggested that Greece sell off a lot of the big tourist draws, like the Parthenon and maybe the Athens airport.

 

[explanade]

Perhaps they should try something innovative, like bringing their retirement age to something that corresponds with other euro countries or even the US heaven forbid.

Well some of the early retirees are those who lose jobs and have no prospects, being middle aged and in a job market with 26% unemployment.

So they go for early pension if they can and typically these are well under 1000 Euro a month.

Or they go and live with their senior citizen parents on their single pension.

It doesn't sound like a lot of former middle class workers are living the good life in early retirement.

Google Greek pensions and there will be stories about what kind of lifestyles these Greek pensioners have, especially in the last 5 years, as many have seen drastic cuts.

Sounds like many would prefer to work, to generate more income. But it's not an option, given high unemployment, brought about by these austerity policies.

It seems the caricature of Greeks retiring early and living the good life on Germany money is not too accurate.

 

[MichaelB]

There's a very good column by Martin Wolf in today's FT contrasting the options Greek voters have in the upciming referendum. http://www.ft.com/intl/cms/s/0/fcb2fb16-1e5c-11e5-ab0f-6bb9974f25d0.html#axzz3eTnkR8qp

If nothing else works perhaps they should take some inspiration from the Duchy of Grand Fenwick.

 

[explanade]

Would love to read the FT but it's paywalled.