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The Euro Smells a Grexit… Stocks Don't
Thee S&P 500 continues to trade in a tight range. Despite all the moves over the last two months, we’ve really gone nowhere.
These kinds of consolidation periods are usually followed by violent breakouts. The problem is you never know which way it’s going to break.
The bigger story concerns Europe, particularly Greece, where the crisis has finally evolved from finance and banking into politics. Previously each round of negotiations regarding Greek bailouts involved politicians who derived all of their power from bankers and the financial elite. As a result, all previous negotiations ended in the banks being propped up while the Greek economy imploded.
This time around Greece has a newly-elected Prime Minister with enough political capital to tell the EU and the ECB to get lost. The risks of leaving the EU are much smaller as there is no hope that another bailout making anything better. Moreover, Russia is standing in the wings ready to provide aid to anyone who would help Putin break open the EU political alliances. Greece knows this.
No one knows how exactly this situation will play out. But the odds regarding a Grexit are much higher than before. The market senses this which is why the Euro took out the support line that held it up throughout the first round of the EU Crisis: 2010-2012.
Time and again, no matter how bad things were in Europe, the Euro failed to take out this line. Not this time.
The reason for this is not really Greece, but what comes after Greece. If Greece successfully negotiates its way to a debt restructuring, Spain, Italy and ultimately France will be lining up next. At that point you’re talking about over a third of the EU economy having to restructure its debt… which would demolish the large EU banks that own those bonds (not to mention the tens of trillions of Euros worth of derivatives bets backstopped by these same bonds).
This is why Greece is such a big deal… because it is the precedent for how the next round of the Crisis plays out. Greece comprises roughly 2% of the EU economy. Spain and Italy and France are MUCH bigger problems to contend with. And they’re all waiting to see what happens (note France recently sided with Greece regarding the possibility of a debt restructuring).
Draghi will need a lot more than a few bluffs to get his way through this one. The market smells blood.
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Best Regards
Phoenix Capital Research
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Draghi is bottom line a mortgage broker, he wants to refinance Greece more than anything, he gets paid on new debt issued and nothing more , and his stooge Tsapiras wants the same thing.
There is as much "negotiation drama" here as a sailor with a $100 bill negotiating with a tj street whore.
Prediction deal with prolific more printing across the globe, no cuts in spending no austerity and staggering new debts and Muslim socialist immigration.
ECB QE was never about stimulating the economy. That was the smoke screen for having the cash on hand to bail out the banks when Greece exits and the contagion spreads. That's why QE was delayed until March. Why wait? Because they knew the Greek situation would take time
Instead of the FREE investment report, would you pay me to take a copy? You know, negative interest rates and all.
The only ones who smell an exit is you my friend and tyler...
Well as we have seen - u-2 are also the only ones that were right calling short on markets 3 years ago....
Right. Only he's not telling the EU and ECB to get lost. He's asking the ECB for EUR 8-10 billion in ELA and EUR 1.9 billion in interest returns. Oh, and access to the EUR 300 billion Juncker infrastructure package, and the EUR 1 trillion Draghi QEIII extravaganza. Is the author of this article actually keeping up with current events in Greece?
I think, at some point, if this situation continues to deteriorate, we might see a 180 from the political elite. Meaning, that if it actually comes down to some kind of MAJOR financial crisis that threatens to blow up THEIR power, it would not surprise me to see that elite turn on the bankers, who have no mandate other than what they've given themselves. Those elected pols won't go down without a fight, they control their various nation's militaries, why would they hand everything over to the bankers?
Why couldn't they decide to nationalize their banks, arrest bankers, cancel their debts and put their militaries on alert? (in case there are any 'collection' attempts..)
I don't think it would be that hard to get the people of most nations on board with a plan that punishes bankers.
All throughout history, human societies have feared the neighbor who starts to "arm up", and become too powerful. Such moves are never ignored. Someone usually ends up declaring war before one side grows too powerful.
Well, the banks have been "arming up", and are growing too powerful economically, holding entire nation's fates in their hands. Will the power-next-door, the political elites, ignore the looming threat? Or will someone declare war father than face defeat?
And don't forget, those militaries are yet another 'elite' that might take exception to the banks accumulation of power. Will top generals stand by as their own countries are taken over by international bankers? Or will they turn on the politicians who have supported those bankers?
This is far more complex than simply a battle between the 1% and the 99%. For one thing, that 99% is comprised of many other groups, some with more actual power than a boatload of bankers...the 99$ are not one giant herd of sheeple to be controlled. And many of those groups have leadership just as sociopathic and power-hungry as they are, like the various militaries. Then there are the political blocs, the religious blocs, ideological blocs, who can muster huge numbers of people at times and take over...it's happened many, many times before.
The current 1% owe all their power to the 99% who allow it. And they don't have to fear the new OWS type movements cropping up, they should fear the well-entrenched groups ALREADY in that 99% who could easily withdraw their permission if they choose. It's not enough to pay off the leaderships of those groups, that tactic always end up failing. Because right under that leadership is a second layer of ambitious wanna-bee leaders (corruption is a favorite charge brought against ousted leaders everywhere..), and under them is another layer, etc. You can't pay them all enough to behave forever.
Big Finance has overreached. They are creating political turmoil in countries now, which is jiggling at the supports for the other power-groups. Almost ALL of those nation's soldiers and junior officers are drawn from the same populations being destroyed under 'austerity'. The few at the top who have been paid-off won't stop the rest when they've decided they've had enough. Military coups usually begin internally, and THEN go on to take the country after they've reorganized a bit. So, this shit HAPPENS, and it happens all the time.
Greece is being wise in their standing for their people. This current leadership seems bright enough, I'm sure they understand the stakes here. For the financial-zombies, it's ALL about debt, and repayment, numbers and figures and statistics, blah, blah, blah. Fix the figures, and make everything work...These new Greeks KNOW that it doesn't, because they see their people eating out of dumpsters. As do all those soldiers and junior officers in their military.
They were elected to put a stop to it. And, succeed or fail, they MUST try. Because if they don't, then THEY will be ousted, and the next layer will rise to the surface. THAT layer contains elements like Golden Dawn, and militaries under governments like that are a very nasty thing. If someone like THAT takes over, the banks will eat the losses anyway, and it's doubtful they'll tour Europe with 'offers' or be as congenial as Syriza has been. So why allow it to happen for no benefit? Not only that, but now you're like the guy who runs his noisy neighbors out of town, only to have meth-dealers move in...(really, you could have used earplugs...so much for having little Debbie's wedding in the backyard this spring...)
Let the banks whine, all they lose is money. Money can be earned back. Disassemble all that Greek 'debt', and repackage it into more derivatives, toss it on the pile with all the rest, you know how it's done...it's really not as important as they're all making it.
On the current course, the Greeks lose a lot more, most of which (like lives and Time..) cannot be recovered, ever. It simply is not worth it to let Germany exact pain from these people just for the satisfaction. Not when the blow-back is gonna shit on everyone's picnic.
The Vampire banks and banksters need a wooden stake driven through their heart.
Contagion will get us all. I'm moving to S. America. The radiation from the nukes will be less there...
;-D
Am still waiting for Phoenix Capital to get a single European prediction correct. Just one!
This Graham fellow predicted parity two to three years ago, and such never happened.
He is like Goldman's research department...trade against whatever he/they profess.
In the financial world, equities ride the short bus.
Yet another powerful move higher in the dollar with equities strongly higher across the board.
That says to me "unsound money afoot."
China, Japan, Europe, Russia...even Canada and Australia.
Brazil, Chile, Argentina, Venezuela...etc, etc.
You could get some hostile takeovers ala the 1980's here using just discounted cash flow as your weapon.
Especially with debt this cheap.
Has a John D feel to it actually. "Just open the spread sheet."
Or the ecb could just buy the debt in perpetuity, oh wait, that's what they already announced they will do.
They should buy 20 or 30% of the debt of each state in a kind of reset, under the excuse of "well now everyone it's over the 60% of GDP debt, so we in fact lower the debt since it's never going to be repaid" they will do this in a way that is not a default. Perpetual bonds bought by ECB?
The 'market' smells blood? First, there are no more 'markets'. Second, when the GREXIT happens (if so) you can be assured that these 3 things will occur:
1. stocks will rise
2. US Treasuries will rise
3. gold & silver will get smashed
Hello, Semperfi,
I'm curious, why would Gold and Silver get smashed if a Grexit happens? That sounds counter-intuitive, to me.
Regards.
I would add that if Grexit occurs, the dollar could strengthen 10-15% against the EUR and you would probably see Gold/Silver down by a similar amount.
THen we would get deflation and could further push it down.
However, this all ends up in hyperinflation. Who knows when. Or more likely what I like to call HyperStagflation.
Fair question. Simple answer.
The gold and silver markets are manipulated by the central banks.
Whenever something happens that SHOULD make PM go up, the CB's smash it down first to discourage buying.
It helps sell the propaganda that gold is no longer relevant.
Smashing the prices down sounds goods to me, ill get more for my money.
Hello, Dead Canary,
Firstly, thank you for replying to me. :O)
Secondly, if what you say is true, then why would ANYONE hold gold or silver (a position a lot of ZHers take, including me)? The price could NEVER rise due to the CB's ability to always smack it down?
Regards.
We are waiting for the day when physical buying breaks the hold the CB's have on the paper COMEX futures market.
That day may never come, (you don't know the power of the dark side of the FORCE) but we are all fucked anyway, so it's worth a shot. It's the only way to preserve our wealth when the next (really big) crash comes.
It's also possible the rewards could be huge.
And more pertinent to your question. CB and currency and derivative games are a casino of limited folly. Do the math on how much purchasing power has been lost in $US since just 2000.
Assume every asset is tied to 100:1 derivative chains and financial games. Gold has no counter-party risk. Manipulate the $ value all for smoke and mirrors. Does not change it's value over time.
Gold is not a commodity. YOU can manipulate it's price in fiat but does not change it's value. Capice? Although I admit that gold has likely way over 100:1 paper derivatives....but when push comes to collapse then Who has actual oz.?
And who has worthless paper that was speculative? I am a firm believer that Ft. Knox has very little gold. But I have a bit (that unfortunately I am too senile to remember where I put it.)
"(that unfortunately I am too senile to remember where I put it.)"
Me too!
I Have gold/silver dating back to 1995. I have watched the games. However buying gold/silver circa (for easy math) since 2000 has still held and increased in monetary value. Say I bought in at gold $300 circa 2000.... have I lost anything over 15 years?
Gold and debatably silver are currency, My ounces of $300 are now $1233 (FINVIZ). Price of coffee? Beef? food? in 15 years? I hold my few ounces as I know they survive the shadow inflation regardless of manipulated smackdowns.
When it flies it will fly. And preserve the proportionate value it took to buy into the future at par (or likely better). So gold is a vehicle to save. It is not a commodity. Never was.
To get really Sesame Street simple. I bought 1 oz. of gold with my after tax savings in 2000. It is now deemed to equal $1233 fourfold increase.
After all the smackdowns and shenanigans a 4X valuation. (in fiat terms).
I used a very simple calculator. Compared purchasing power with dubious stats. Compared purchasing power of $1000 in 2000 to 2014......bingo came up with $727.39. So the US $ is soaring is it?
Why hold gold and silver.
And please bear in mind that the $300 I used in savings to purchase one oz. in 2000 was at the time able to purchase $300 worth of goods at the time. I chose to perserve my savings into the future. I made the choice to not ride the S&P bandwagon of manipualtion.
I have lost a lot of potential gains but sitting out this game. But I am not a gambler, a thief or a liar.
It is precisely because Cyprus, Italy, Spain, Portugal and France will all follow that Grexit cannot be allowed.
It is all bluffing from EZ for benefit of electorates at home.
Let's face it, if Greece defaults on €280bn, Germany alone is on the hook for €70bn or so. Imagine what AfD will make of that! At least with a perpetual loan the money has not actually been 'lost' - even if not repaid in my lifetime.
The problem is ,how do you sell the perp bonds scam to the German electorate.
..or any other disadvantageous deal with the Greeks.
The same applies to the Greek govt of course
Their room for manoever is limited.