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Funds Affect, Euro Zone...Greece or not? Does it really matter??? Your thoughts..........

edited May 2012 in Fund Discussions
Howdy,
Recent chatter during the past few days has theories of Greece leaving the EZ and its currency....again. Part of the theory would require that between a Friday close of Wall St. and before the opening of markets in New Zealand, would allow 46 hours to do the whole deal, including all of the needed functions of establishment of the drachma, reset all of the Greek banks..............and blah, blah.
I don't find this as a reasonable situation and find that a formal plan would have to be in place that may require at least two weeks of work.
--- Worse case scenario...........either way.

Greece stays in the EZ........their debt is still worthless and is an entry in an electronic file of the ECB and countries holding the trash. If Greece leave the EZ, the electronic debt is still trash. Portugal, Spain, Ireland and Italy would monitor the reaction to such an event of Greece leaving the EZ; and have their own considerations. Germany in particular will not likely allow for a large debt into their own country to help Greece stay in the EZ; which would also likely cause inflation in Germany............but not from a growing economy.

Regardless of who stays or goes, much of the debt is nasty paper; and in the best situation of a fix, will take many years to paydown or unwind.

Some in Europe have mentioned offering an ECB bond. Duh, what will this do? Nada, in my opinion. These would only be fresh manure piled upon the old manure; but it is still a manure pile, only larger.

If a perceived magical temporary fix arrives from the current Euro conference now in place. The equity markets could rally as those with shorts against these markets sell their shorts. When the upmove causes enough new value to be reaped, down come the equity markets again.

I see large capital letter WWWWWWWW's for the markets charts for the remainder of this year. The high and low points of the WWWWWW's will come from the traders and machines.

In the longer term, if Greece and others leave the Euro; at least they will be able to compete to some extent with any exports against stronger currencies. The hurt would come from whatever they had to import to survive; paying the big dollar/Euro. How many new Drachma would be required to buy any type of fuel needed in Greece?

Lastly, cracks have finally appeared over the past several days in the Euro versus $. Euro's are traveling somewhere away from perceived real danger; in my opinion.

What say you?

Thank you.
Respectfully,
Catch




Comments

  • Well, if the "Grexit" post (below) is accurate, and "Euro zone officials have told members of the currency area to prepare contingency plans in case", then it would seem that there is no coordinated central plan for an orderly exit. If so, what's to happen- each Euro member goes off in a different direction according to perceived self-interest? Where does that leave anyone or anything? No wonder the markets are having a heart attack.
  • edited May 2012
    "Some in Europe have mentioned offering an ECB bond. Duh, what will this do? Nada, in my opinion. These would only be fresh manure piled upon the old manure; but it is still a manure pile, only larger. "

    That's why it's probably what's going to happen. You have people who think piling debt upon debt (and going further into debt with many of the same people who got things there in the first place doing the further spending - terrific idea) is the solution.

    Take a look at Spain and outlawing cash transactions over $2500 EUR (http://thedailybell.com/3814/Spain-Bans-Cash - and I think that article is actually worth a read) You're probably going to see more of that sort of thing as desperate governments try to crack down and get every tax dollar they can. Will it work? Eh. I'm guessing probably not, because people are already doing things like moving money to German bonds that pay zero interest. In this day and age, people are quite able to get ahead of these things.

    I can say "they aren't going to let Greece leave" and "governments are going to come in if things get worse" and while that may be true, if there's a real scramble for safety in European countries, people aren't going to care if governments do this or that, or say that "everything is okay."

    That said, there are people who are going to be able to come in and buy European assets on the cheap in all this. Banks will have to puke up assets and there's going to be people who buy them up at change on the dollar and probably, in the long-term, do very well. Like any other crisis in the past (Asian crisis, etc.)
  • edited May 2012
    Dunno, Scott- can't see Merkel going anywhere with the ECB bond. Kind of like your out-of-work neighbor asking you to co-sign on his car loan, yes?

    OK, young man... what are you and I going to buy "on the cheap"?:-)
  • edited May 2012
    Reply to @Old_Joe: Buying a couple of things here with a long-term view, but I think there's more probably more downside.

    Overall, some broad funds, individual names I like as long-term stories, a lot of alternative investments. Circling the wagons around that.
  • Reply to @scott: "That said, there are people who are going to be able to come in and buy European assets on the cheap in all this. Banks will have to puke up assets and there's going to be people who buy them up at change on the dollar and probably, in the long-term, do very well. Like any other crisis in the past (Asian crisis, etc.)"

    And, not long after ....

    http://www.bloomberg.com/news/2012-05-23/slim-family-sees-european-crisis-as-good-time-to-invest.html
  • Reply to @scott: I read that article earlier. Some of the comment from the article is even more interesting... Clearly this person is not a fan of the Slim's family.

    "May Carlos, an Obama supporter, should take his "gifted" billions and donate it to the Obama campaign.

    Oh wait, thats already happened. Yet another truth good ole Bloomberg and Maddow's of the world will not talk about.

    you just hear their whiney voices say "koch brothers, koch brothers".

    What scum.

    As for Carlos and his empire. Great job building out the middle class. Carlos has used the laws and manipulated with his wealth to acquire massive wealth and power. Carlos scoots antitrust laws, buys off judges, and rails against higher taxes for people like himself. He is corrupt to the core and the root of the problem in Mexico.

    Meanwhile Mexico has 47000 dead and counting and zippo of a middle class. Great job greedy Carlos. Only aided by that drug lord brown noser from the past Vicente Fox."


    The fear now (worst scenario) is the potential risk of spreading from Greece to other PIIG countries that leads to the spiral downward for the EU economy. Now that the global economy is closely linked, this will also affected everyone.
  • edited May 2012
    Greece to the EU... Should I stay or should I go?

    Should I stay or should I go now?
    If I go there will be trouble
    And if I stay it will be double
    So you gotta let me know
    Should I stay or should I go?

  • edited May 2012
    Hi Maurice,
    I've had a few tunes traveling through the head the past few days....related to the EU, too. Forgot about this; and a most fine choice you have placed for the lyric to match the mood.
    Genrally, my political mood music for the below.

    "Every move you make
    Every vow you break
    Every smile you fake
    Every claim you stake
    I'll be watching you"




    Take care,
    Catch
  • I wonder if they've ever considered a single currency for the Americas.

  • all that really matters in the U.S. is companies growth and GDP. Greece doesn't mean a thing.
  • Hi ron,

    You noted: "Greece doesn't mean a thing."

    What is and why then for; all of the fuss in the markets?

    Take care,
    Catch
  • Whatever happens to Greece would have its affect on the European markets and it's unlikely that Europe will let it happen. There are those alot smarter than I that will give you endless reasons how the U.S. will be affected but its all debateable and makes good press. I rather have the positive outlook after being in the markets over 55 ytears.
  • Apparently Europe's did pretty well today, because the polls in Greece are favorable to the country remaining with the Euro. The Athens market was up almost 7%. So no problem man. Well until later in the week when we heard the end of the world is coming because the polls are showing Greece may vote against austerity. And Spain maybe next on the hit list.

    Europe seems to be suffering from a multiple personality disorder. Then again when you throw all these countries together so quickly, why wouldn't these things happen. How many countries in the EU, want to be like Germany? Or more appropriately, how many are willing to do what it takes to be like Germany.

    http://finance.yahoo.com/news/global-shares-euro-consolidate-lows-002158786.html
  • "how many are willing to do what it takes to be like Germany"...

    Having just finished Schirer's "Rise and Fall of the Third Reich", we'd best not go there...
  • I didn't OJ. I'm discussing today's EU economies and the EU currency. The Germany of today has transformed itself into one of the leading democracy's of the world. When you bring up the subject of past atrocities, it detracts from and changes the context of what I am trying to say. If you wish to revisit the past and the book, that would be fair and interesting, but I'd suggest that it be another topic.

    That said, I've never bought a German car. I have a friend who resides in Hong Kong who would never buy a Japanese car. Your comment is not lost on me.
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