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Beware of Greeks Bearing Bonds?
Michael Lewis wrote an excellent article for Vanity Fair, Beware of Greeks Bearing Bonds (HT: Lambros). I highly recommend you read it carefully. Lewis is a gifted writer who knows how to get at the heart of the issue.
Over here, in the Land of Zeus, things are much like they have always been, except people are feeling the economic anxiety stemming from internal deflation. But while we only hear bads news coming out of Greece, let me share with you some good news.
I had a chat with an uncle of mine who is extremely well read on Greek economic matters. Here are some things you should bear in mind before you write off Greece:
- The Greek bailout had nothing to do with Greece. European banks were exposed to subprime debt and they wouldn't have been able to handle another major crisis like Greece imploding (no suprise there).
- While tourism and shipping still make up the bulk of the Greek
economy, traditional and renewable energy are going to grow in the years
ahead. Qatar is investing billions for natural
gas production and Libya is now in talks to use Crete as a natural
gas hub. A nat gas pipeline will be built connecting Crete to mainland
Greece. - Americans are investing billions (49%) in one of the
largest solar farms in Europe up in northern Greece (we are talking gigawatts). - The Chinese are developing the Greek ports, and will expand their use of these ports as a gateway to Europe.
- The Israeli-Turkish crisis has been a blessing for Greece. Israelis are flocking to Greek islands to vacation. Right here in Crete, I am seeing Israelis all over the place. Russian plutocrats are still vacationing in Elounda, Crete. A taxi driver told me one of them blew 300,000 euros where he booked a hotel for "an evening of fun".
- Greece is also enjoying an influx of Turkish tourists (the ones who make up the top civil service and hold European visas). Greeks have been visiting Turkey for years, and many Greek families on tight budgets still vacation in Turkey.
- The biggest problem Greece has is political organization and internal economic development. Small businesses are still finding it hard to gain access to credit, a widely spread problem throughout the developed world. Finally, the tyranny of insane bureaucracy is killing the Greek economy.
In sum, while everyone has written off Greece, Greek bonds, and the Greek stock market, I would follow the large Norwegian Petroleum Fund who recently gave a vote a confidence to Greek bonds, the Euro and Europe. Over the long-run, you will make money investing in Greece, but you will need nerves of steel to deal with the political and economic turbulence.
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and don't forget the Greeks literally invvented the byzantine bureaucracy...
Leo,
After reading your article and noting your list of "positive" talking points, the phrase that entered my mind was, "to the victors go the spoils".
It seems the beast has died and the scavengers are picking at the bones. What is still up for grabs is whether Greece will be a wholly owned subsidiary of the People's Republic of China or an estate of a Russian oligarch, complete with pubic hair and nipples painted on all the statues. This is 21st Century Imperialism, a warning to all who live beyond their means. The fall goeth before the pride (America take note.)
Hopefully the land's new owners will behave better than the Nazis did.
If I was a Greek, knowledgeable of my nations long and rich history, aware of the enormity of its cultural and intellectual legacy, I'd be hard pressed to put the cap back on the bottle of Ouzo. Rather than view this as a positive, it just makes me sad.
Well,
jobless count is now at 12% in greece. Even the IMF is expecting that it is at 20% at the end of 2010. So realistic it will be 25-30%.
30% of all Stores are out of buisness so far, and rising.
With all of the tax rising they expect to get 13 Billion more this year. Till now they have less than 2.
/Sarcasm on
So they are on a good way. All is fine. Buy Greec Bonds.
/Sarcasm off
Blogging from Athens, my take on things.
First, I have to say the Vanity Fair article really messed me up for the rest of the day, after I read it. We are talking real visceral reactions here. It is a scathing criticism of greek society in general, beyond some inaccuracies. However at the end of the day, I was left thinking whether it is part of a repeat of a media operation against the euro and EU, highlighting Greece as the obvious scapegoat. And I thought that as a collateral damage of this global media operation that frankly has nothing to do with Greece, nobody is gonna lend to Greece ever again. Having said that, the blame is laid on Greeks for projecting a ridiculous Zorba image in perpetuity and leaving themselfs exposed as cannonfodder to MSM psyops operations promoting an atlanticist geopolitical agenda.
In my view, Greece is an extreme example of moral, social, political and economic decadence prevalent in all of the west (and much of the east aint fairing much better either, if you ask me). As such it is the perfect scapegoat.
This does not absolve greek society of their responsibility for messing up their affairs. But it does put this PIGS business into perspective. It also highlights the difficulty of changing course for an entire social system in decadence, or that social decadence is like a systemic infection that needs to be dealt early before it takes a life of its own. Given that, I guess more advanced westerners should take note and cut down on the schadenfreude.
As for investing in Greece, unless the current kleptocratic greek sociopolitical elite is brought down (by whom?), investment in Greece will be extremely speculative and opportunistic in nature. The current rotten state of affairs will keep it up as long as external life support continues, and given the small size of the greek economy, it can be kept parasitical for a long long time, if that would serve other considerations. However, as extreme nationalism is the only ideology holding the fabric of greek society together and thus the only political platform that could bring its statist elites down ( and replace them with other ones), I really worry how this thing plays out. Truely between a rock and a hard place or Scylla and Haryvde on a more poetic note.
oh LEO i just got a picture book of GREEK MYTH. beautiful pictures. i want to go to greece really really badly. oh, the folklore, so intriguing. it must really be a very spiritual place. love the origin of gods and goddesses. i am in love with greek mythology. water, rivers, mountains, caves, earth, underground, sky, solar, beautiful woman and ZEUS, man did he get around. i mean he made it with a lot of chicks and had offspring coming out of his, you know what. anyway, good to read you again, mate.
Leo, are you this fellow on the picture? You don't look very reliable.
Leo is pumping Greek bonds now?
What happened to Chinee solars?
Gave him a 5-star for humour, anyway.
Its a bit of a dog's dinner isn't it?
It's not about good or bad people, economics, politics or anything else. It's about what the big guys can pump or not. That is all, return to your homes.
My favorite comment was that "Pimco wouldn't touch Greek bonds with a bargepole". Who cares what Pimpco thinks of Greek bonds? They probably made a killing shorting them.
I read this entire article expecting a punch line at some point!
I read this entire article expecting a punch line at some point!
Nerves of steel yes.. and some good guarantees. If they leave the Euro, which I think is bound to happen sooner or later, things will get... interesting...
Leo, I read that excellent Michael Lewis piece just last night and after his take on the breakdown in Greek society I would not touch the country's securities under any circumstances until they clean out the rot. If they ever can.
Zeus? Land of Icarus, too.
Not to mention buggery as well. Not as touristy as "land of Zeus" but we are discussing the prospects of future Greek bondholders.....
Leo,
Your prose, you claimed, was to explain why Greece may be able to meet its debt obligations. And yet, you've done no such thing. At no point did you tie in how Greek debt payments are going to be met... you can't just look at isolated anecdotes and pretend that they will solve macroeconomic problems.
I can write a prose about how Blockbuster has a competitive advantage because they get to release new movies a month before Netflix. In the end, so what, the company is bankrupt for a million other reasons. Same with Greece.
Leo
You should look into the Greek union pensions funds. Do some digging, find out what assets they bought and what they are valued at....
Then you'll understand how totally screwed the place is.
Much as I have to admire the chutzpah of this author, I am inclined to see this as part of the great 'Greece is OK really' pr drive being undertaken by Athens/Trichet/the ECB/Brussels to arrest an otherwise unstoppable run on the euro. So here are the opposing facts:
1. Pimco would no touch Greek bonds with a bargepole.
2. Top credit manager opined to me today, "Either Norway has gone nuts, or is being used to mutual benefit.
3. Norway is a massive exporter of energy in a flat energy market.
4. Norway is part of the EAA but has one foot in the EU.
5. Greece needs to cut the yields on its bond issues,otherwise it will sink anyway.
6. US currency dealer told me today, "Greece has two options - default now, or default later".
7. Greece will next week begin a roadshow through the World's bond capitals to persuade buyers that the yields are too high.
8. Norway is also buying Spanish, Italian and Portuguese bonds. Why?
9. The EU needs guaranteed access to oil and gas should Russia decide to turn nasty.
10. Given those realities....if you were Trichet, Greece amd Norway - wouldn't you come to an arrangement?
I rest my case.
Meanwhile, more geopolitics....
http://nbyslog.blogspot.com/2010/09/geopolitics-china-begins-flexing-its...
Horray for the Vikings.....There on a come back. This time they're using money to conquer! No one wants to row those big boats anynore.
Got to give you credit. You take a lot of well deserved bashing, and you still come back. Soros could use a guy like you.
the greeks are tied in with the mafia and possibly the islamics. it's not wise for us to act against our own interests.
http://covert2.wordpress.com
you are an idiot, stop spamming ZH with links to your lame blog
Did you take the time to read his link?
My question is: Where are all of the women liber's? They have fallen silent. They gave George W. more trouble than Barry who seems to be fine with Shriah Law moving forward.
Funny hats and funny beards, obviously all is well in the Greeks Isles.
I love countries where people routinely wear funny hats.
Like this?
Your uncle should stop reading PASOK propaganda and start talking to Greek families sliding into destitute. He'll have no trouble finding them, they are growing in numbers with every passing day.
Wake up, Leo, Greece is sliding into a pretty serious depression. It's shameful how their politicians (both parties) and financial/corporate elite have sold out this beautiful nation. Papandreou will be hanging from a tree soon enough though, the Greeks have a history of organized rebellion, it's in their DNA.
Taraxias, all Greece has done is stop tax witholdings, so Greeks will have to pay up all at once at year end! Other than that, nothings changed and still USA is 100 times worse than Greece, as Leo the desperate pumper searches for any spark of hope to continue his permabull stance on everything.
Did you attend a Goldman-sponsored course on logic? So Greece's inability to service it's own debt had nothing to do with Greece? Hmmm... I think what you meant to say is Greece can't pay its bills. The rest of Europe does not want to face that reality and the accompanying writedown on the Greek debt they own, so they decided to throw good money after bad in order to buy time. That is NOT an endorsement of Greece.
As usual, the victim of the con can't admit that he was taken, is that what you mean Leo?
Just a look at the last name of the author and I can't help but think there may be a pride issue here. I think it is great but no way in hell would I put my money in a currency that is spent.
In Gold We Trust.
This is pure crap Leo. All the rich Russians in the world are not saving Greece by blowing a few hundred k on coke and hookers. Solars ain't doing the trick either. Did you miss Volcker today..."euro in real jeopardy"? IMHO it is very safe to write off Greece, and most likely the EU.
Hey Leo,
How about meeting up for a drink?
6932204153
Leo - is Norway betting on Greece? Or, are they betting on the ECB's unwillingness to let the bonds default?
These are two entirely different questions.
Where are the nekkid wimmin, Leo? You're off your game.
OT, but too good not to share. Go GOP.
http://gawker.com/5634055/the-craziest-political-speech-youll-see-this-f...
Dismal Scientist now link Obamas insane speech from today!
Barry's speech was utter nonsense, clearly. I am realising that this post of mine though, provokes a kneejerk reaction in GOP fans (see Liberal Sodomy's stupidity elsewhere).
I have no allegiance to either party, since I detest all politicians ... and am not American.
You have just labeled yourself a troll - grats on that!
know your enemy
Not being American makes me a troll ? I suggest you may have just labelled yourself 'idiot'. This site has people all over the world.
Leo is being paied to write bullshit like this.
That's the only possible explanation.
Has to be, Leo's getting paid to pump this garbage and zerohedge has to keep him around as 'balance'. Leos articles are rubbish.
was wondering where u were Leo...
Nerves of steel and deep pockets for a default. No thank you. The Greeks will survive and I'm sure will prosper in the future. That does nothing to erase the fact that the EUR will make it impossible for them to pull through in current form.
You mean the nerve of the con-man, and the deep pockets of the sucker.
Nerves of steel and neurons full of lithium!!!!!
One must be crazy to go anywhere else in the world today !!!
All govts and politicians are the same, promises to give everything to the world and they keep their promise -but only to their family,friends donators and unions.
If you are in any of these you won't be on ZH
Problem with greek gov bonds is that they have no tax revenue to support them and the policymakers can't cut spending or tax more.
why would you lend to such a government??
Norway's bet is with ECB not greece per se
maddy10,
I think you nailed it. The Norwegians are only investing in Greek bonds because the ECB has guaranteed to make them whole if the Greek's default. This is the EU's version of QE. If the Greek's can't handle their debt, which is an extremely high probability, the ECB will print print more Euros (ala Bernanke) and keep the bonds from defaulting. In the meantime, Norway gets a very good yield, since Greek bond yields have soared back to crisis levels.
Leo, the good things mentioned in the article just do not make up for the 140 % debt to GDP. You might make money on these things before the country implodes, but is it worth the risk? Hopium in Greek would be?