Is it time to let Greece sink?
CaptHenway
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During World War II, allied ships crossed the Atlantic in convoys that could be protected by warships. It was a relatively effective system, but one drawback was that the convoy could only travel at the speed of the slowest ship. If a ship broke down, or got damaged by a torpedo, it might get left behind to save the other ships. Such solitary ships were then easy prey for the u-boats.
Is it time to let Greece sink under the weight of its self-generated debt? Take it off the Euro, and let it print whatever worthless Drachma it can for local consumption?
This would increase the speed of the rest of the convoy.
Is it time to let Greece sink under the weight of its self-generated debt? Take it off the Euro, and let it print whatever worthless Drachma it can for local consumption?
This would increase the speed of the rest of the convoy.
Numismatist. 50 year member ANA. Winner of four ANA Heath Literary Awards; three Wayte and Olga Raymond Literary Awards; Numismatist of the Year Award 2009, and Lifetime Achievement Award 2020. Winner numerous NLG Literary Awards.
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One thing I have learned about markets overtime though is that what hurts the most is unforeseen events. Greece leaving by itself would not be one of these events. How the global bond vigilantes react afterward, and what the EU response to that inevitable pressure to sell bonds of Spain, then others, would say a lot about how bad the damage would be. Of course there will be a coordinated and large response by the EU, the US and even China, when Greece leaves.
In the end, as usual....no one knows the ultimate reaction, even if they think they do.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>Southern eurozone countries are begining to miss the freedom of having their own printing press. Look for many of them to aquire the illusion that they can print themselves out of financial trouble. >>
Yeah, apparently following everyone else down the same path to inflation perhaps!
Greece should not withdraw from the Euro, Germany, the Netherlands and Finland should.
Box of 20
However, if they are in the water now, and they put themselves there, and not doing enough different to change, let them swim on their own for awhile and work it out. Wish them well on their fixes.
Who's going to bail us out. It that how its going to start for us. Citizens on line at the bank for a few days pulling out their cash, before they shut them down?
as with gangrene, cut off the toe to save the foot.
this may turn out to be a positive for the markets if the Greeks elect to leave the eurozone.
It will start a domino chain especially with most realizing that the other PIIGS will be close behind. It really doesn't affect Greece
as much as it does the ones that loaned them the debt. Greece is toast whether they hang in with the EU or go it alone. I don't
know if all those banks could afford those hundreds of $Billions in Greek losses at this time. It would be similar to all the US banks immediately foreclosing on
every bad home loan. They couldn't afford that hit all at once either.
<< <i>I would love to see "bailouts" never happen again. Not for countries, not for economic associations, not for states, not for companies, not for individuals. Learn to swim or die. >>
<< <i>Greece defaulting on its debt will cause a large pile of CDS swaps to blow up. These are held by major EU and US banks.
It will start a domino chain especially with most realizing that the other PIIGS will be close behind. It really doesn't affect Greece
as much as it does the ones that loaned them the debt. Greece is toast whether they hang in with the EU or go it alone. I don't
know if all those banks could afford those Greek losses at this time. It would be similar to all the US banks immediately foreclosing on
every bad home loan. They couldn't afford that hit all at once either. >>
CDS: the governments can screw the CDS holders just as easy as they screw the Greek debt holders. I'm not talking just the Greek gov't. Also, I'm sure there have been hedges placed and positions unwound to reduce the effect.
PIIGS: the less they give the Greeks the more they have for the PIIS, and Greece would give the rest of PIIS a reminder of what it would be like if they chose the same thing.
debt: Greece has already had some writedows of debt of over 50%.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Experience the World through Numismatics...it's more than you can imagine.
MJ
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
<< <i>I expect a surprise German exit to be the upcoming black swan. Germany will soon realize it is better off getting rid of all the risk at once. It's citizens are tiring of international bailouts - this puts some threat on the ruling party. >>
+1
Wow derryb and me finally agree on something!!!
Also keep in mind that the Euro is a lifelong dream of most of the current ruling class and the next party in line, in all of Europe. That dream isn't likely to die an easy death. Logic and finances, are not as powerful as a dream. That's one reason they didn't draw up any contingencies for forcing countries out of the Euro, only for allowing more countries in, they were dreamers.
World War I and II started in Europe. Will World War III start there too? If so, when does it come? In five years? Ten years? Europeans have a long history of conflict. Peace among Europeans seems more like the historical exception. This peace since the Berlin Wall came down may be an exceptional time in history, and the pendulum may swing back to a more normal historical state of conflict.
The CDS holders also tend to be the Greek debt holders. The supposed "hedges" in placed to balance the risk have already been proven to be pretty poor performers (ie LTCM,
Enron, BSC, Lehman, MF Global, and now JPM this past week). These otc swaps don't perform. Positions in derivatives were unwound about 10-15% from around 2008-2010.
But the boneheads piled them right back on by the end of 2011, pushing them to an all-time high. They have more total risk than ever. In those cases where the CDS holders and
debt holders are different people, the precedent of the derivatives/swaps regulators telling Greek debt CDS holders to pound sand would immediately place pressure on those
holding PIIG's CDS's. There will be a rush to get out of them but nowhere to go. Values will plummet. 2008 all over again. Even though Greek debt has taken a haircut, the
CDS holders haven't been told they'll get nothing. If that's the final result, then it will place at least $50 TRILL in non-interest rate related swaps/derivatives at total risk of default.
And it might even put pressure on the $550 TRILL in IR contracts as well. The last time the banks were told to take a hike was in 2008. They promptly tanked the stock markets
and then blackmailed govts for TARP and QE payments.
<< <i>I expect a surprise German exit to be the upcoming black swan. Germany will soon realize it is better off getting rid of all the risk at once. It's citizens are tiring of international bailouts - this puts some threat on the ruling party. >>
I wouldn't blame them.
<< <i>+1
Wow derryb and me finally agree on something!!! >>
stay tuned, further progress in the planning stages.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
"“Those who sacrifice liberty for security/safety deserve neither.“(Benjamin Franklin)
"I only golf on days that end in 'Y'" (DE59)
“I don’t envisage, not even for one second, Greece leaving. This is nonsense, this is propaganda.” – Jean-Claude Juncker, Chairman EuroGroup FinMin Committee
“When it becomes serious, you have to lie.’’ – Jean-Claude Juncker, Same guy
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Man, that would dump on the markets for awhile...but what an opportunity afterwords to pick up the pieces. Assuming there's anything left to pick up...
It was time a long time ago. Instead, the US will bail them out in order to preserve our blissful economy. Socialists won't let Socialism fail.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
One less can to kick down the road.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>German press reporting Greek exit is a done deal
One less can to kick down the road. >>
If true as I stated before, good riddance. Don't let the baklava hit your a$$ on the way out............MJ
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
Hilarious stuff.
I knew it would happen.
To all appearances, the citizentry in both places is poised to vote--or has voted--with that conviction in mind.
Here's a warning parable for coin collectors...
In God We Trust.... all others pay in Gold and Silver!
They'd need to announce what they will do to restore the balance sheets of affected institutions and the other PIIS need to come out and make clear their intentions with respect to austerity and staying with the EU plan. Hollande and Merkel will have to both speak to being for the plan.
linky
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Morning Gold & Silver Market Report, 5/30/2012
by Ryan Schwimmer May 30, 2012
TROUBLED SPAIN MIGHT EXIT EUROZONE
American stock futures and Precious Metals are trading lower this morning in the wake of another credit rating downgrade in Spain. Borrowing costs in that country soared, and it has now become a matter of when, not if, a bailout will be necessary. Reports are also showing that the European Central Bank has rejected Spain’s plans to recapitalize Bankia SA, its largest bank, which put a dagger in sentiment. This news drove up the American dollar, while Precious Metals have been pushed down.
A quick look at the headlines on CNBC’s website confirms that most of the focus is on the eurozone. One headline is particularly interesting, with an analyst suggesting that Spain could exit the eurozone before Greece. For Spain, the eurozone’s third largest economy, leaving the euro may not be that country’s choice but instead may be the European Union’s. “They are too big to rescue, they have no political hang ups about rupturing their relations with the EU, they are already fed up with austerity, and there is a bigger Spanish-speaking world for them to grow into,” said Matthew Lynn of Strategy Economics.
Many investors are fearing that China could be slipping into a similar situation to that of 2008 and 2009, but top advisers said “massive fiscal stimulus” is not the answer at this time. Richard Boucher of the Organization for Economic Co-operation and Development said, “I don’t think we’re back in that kind of acute crisis phase. … It is not just a question of money. The Chinese authorities have a whole variety of tools to use to stabilize the right level of growth. … I think signs that Chinese growth is stabilizing at a steadier level, a more sustainable level, would be good for everybody.”
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Buying Bunds is exactly what the Europeans are doing. And they're making a killing. While all other assets are declining, the "full faith" is rewarding investors in Govt bonds.
Knowledge is the enemy of fear
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>keep buying 'em.
Of course every dog has its day. Even gold was able to break out of a 20 yr hibernation. Everyone shunned bonds over the last year yet they have been the best performing asset. HMMMM. I fully expect bonds to reverse their massive bull market. However, I am not so sure gold will react well to higher rates.
Knowledge is the enemy of fear
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
What's different this time? It appears to me that they are much more slippery in how they hide the debt monetization. Isn't technology great? Nobody seems to have a clue in the MSM, and furthermore they really don't care to find out.
I knew it would happen.
Well then I guess govt debt is about to decline 20%.
Knowledge is the enemy of fear
<< <i>gold will continue to react to gov. debt.
Well then I guess govt debt is about to decline 20%.
Or gold will slow down and let debt catch up, again.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Wouldnt make for good marketing now would it?
Right there be your manipulation and conspiracy.
Knowledge is the enemy of fear