Archive - Feb 10, 2012

While the bulk of today's Syntagma Square drama will come at a later hour, once the cabinet convenes at around 6 pm (or likely much later because as of this point there is no agreement on the Troika deal which kills it as per Troika demands), or maybe even tomorrow, we have already seen a prequel of what to expect courtesy of the now traditional exchange of Molotov cocktails and tear gas between Greek protesters and riot police. From Bloomberg: "Greek police used tear gas against masked protesters in central Athens after they attacked police and stores at the end of a march against austerity measures. Greek unions held their second strike in a week against the proposed measures as Finance Minister Evangelos Venizelos pressed lawmakers to yield to conditions for a bailout, saying a refusal would open the way for the country’s exit from the euro. Nicole Itano reports on Bloomberg Television's "InsideTrack."

If you do not change direction, you may end up where you are heading.--Lao Tzu

Heading into the North American open, EU equity indices are trading lower following reports that Eurozone Finance Ministers have dismissed as incomplete a budget presented to them by the Greek party leaders. In addition to that, EU lawmakers have warned Greece of more intensive involvement in the Greek economy to improve tax collection and accelerate the sale of state-owned assets. The Greek Finance Minister Venizelos said that Greece must make a “final, strategic” decision Greek membership in the Eurozone over the next six days as it decides on new austerity and reform measures or faces leaving the single currency. However, according to sources, German finance minister told MPs, Greek reform plans would bring debt to 136% of GDP by 2020, instead of targeted 120%. So it remains to be seen as to whether Greece will be able to meet the looming redemptions in March. Of note, analysts at Fitch said that the ongoing Greece talks stating that the country must secure an agreement to cut its debt burden in the next few days to prevent a “disorderly” default.

• Eurozone dismisses Greek budget deal (FT)
• Germany Says Greece Missing Debt Targets in Aid Rebuff (Bloomberg)
• Germans concerned over Draghi liquidity offer (FT)
• Azumi Says Japan Won’t Be Shy About Unilateral Intervention (Bloomberg)
• Schaeuble Signals Germany Is Flexible on Revising Terms of Portuguese Aid (Bloomberg) - food euphemism for "next on the bailout wagon"
• Venizelos Tells Greek Lawmakers to Back Budget Cuts or Risk Exiting Euro (Bloomberg)
• Putin May Dissolve Ruling Party After Vote (Bloomberg)
• HK Bubble pops? Hong Kong Sells Tuen Mun Site to Kerry for HK$2.7 Billion, Government Says (Bloomberg)
• Gross Buys Treasuries as Buffett Says Bonds Are ‘Dangerous’ (Bloomberg)

Remember the pomp and circumstance with which Venizelos showed up in Brussels yesterday carrying a two paragraph statement from Lucas Papademos in hand, saying Greece promises it has agreed to agree to make idiotic "pledges"? Well, as was largely suspected by cynical old us, even that "deal" has lasted not even a whopping 24 hours.

• GREECE'S KARATZAFERIS SAYS CAN'T VOTE FOR TROIKA ACCORD AS IS - BBG
• GREEK FAR-RIGHT PARTY LEADER SAYS ELECTIONS WOULD NOT PROVIDE A SOLUTION NOW, WOULD NEED MORE TIME

This is coming from the LAOS coalition member whose support for the Troika accord was supposedly in place yesterday.Alas, without his endorsement, the whole thing is off. And just to complete the sheer chaos that is about to be unleashed in Greece:

• Greeek far right party leader says asks for reshuffle of Papademos technocrat gov

-> Kiss this whole thing goodbye. Just as Germany wanted all along. And the EURUSD, which lately had traded with the sheer idiocy with which one trades US 3x beta stocks, and which had soared on what was glaringly idiotic hopes that this time, just this time, things in Greece would be different, tumbles.

The situation in Greece has taken a more sinister turn. The outrage in Greece is growing. More and more of the people on my distribution list with ties to Greece are pointing out how bad things are there. Daily life is getting more difficult by the day for most people, yet the EU has told the Greeks that their current offer isn’t enough and that they have doubts about its implementation. At least they got that right, the austerity measures, will not remain implemented. It seems obvious to anyone who hasn’t become locked into a negotiating stance that the whole austerity idea isn’t working. It is possible over the weekend that the Greek parliament will defer to EU demands and vote in a plan that is “acceptable” but I don’t see it lasting. The people are fed up and more and more realize that defaulting and costing the foreign bankers money is worth a shot. Default is NOT the end of the world or of Greece. For all the politicians who keep saying default is the end, they are just wrong. It will cause problems, but Greece will survive, and for the first time can start focusing on a plan to move forward rather than dealing just with problems of the past.

Summary of stock, bond, commodity and FX news.

In real terms, if a continued rise in US markets is accomplished through covert or overt QE, ironically one will grow poorer as the nominal dollar amount of one’s US portfolio rises but one's purchasing power of said dollar plummets. So rise or bust, either way you lose.

A scandal before construction has even started.