Beware of Greeks Bearing Bonds?

Via Pension Pulse.

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. 

Comments

[Missing_Link]

But Vamp, look at points #2 and #3!  Solar farms and renewable energy projects!  Surely those are completely relevant to Greece's financial situation, and imply that Greece faces a bright future full of magical unicorns that fart gold coins and sh** ice cream.

[masterinchancery]

+100 That's just mean ML, pointing out the same old renewable energy fraud that always gets dragged out when everything else fails! Obviously you didn't eat you Hopium cereal this morning.

[The PolyCapitalist]

Agreed. For Greece there are two options: default now or default later.

http://seekingalpha.com/article/224509-european-sovereign-debt-default-n...

[chrisina]

It'll be default (or restructure) later then.

I mean, do you know any Govt of any country in this whole worldwide credit mess who has preferred to do the responsible thing now rather than kicking the can further down the road?

How far can they kick it? No idea, but I'd say the risk they can't kick it for at least 2 years is minimal. 

Would I buy the Greek 2 year? Nope, got better things to do with my spare cash.