This page has been archived and commenting is disabled.
Monday Will Not Be The End Of The World, Sorry
Via Mark Grant, author of Out of the Box,
It was January 13, 2010 when I first wrote in my commentary that I thought Greece would go belly up. It was in May 2010 when they first needed to be bailed out. This small country with a giant debt of $1.3 trillion has engaged the markets ever since. Sunday the country votes and whoever wins I expect no massive explosion in the short term. The new Greek government will try to renegotiate the terms and conditions of their bailouts and we shall see just how far anyone is willing to go. It will be a game of chicken with Germany in the end and a solution perhaps will be found but no good one as Greece could not pay back their current debts if Hercules arrived to help; much less any new debts which will be required to keep the country afloat. Any “Big Bang,” if it comes, will not come on Monday morning as that will just be the beginning of the process to scream and shout and dance around like some Opa bar with Ireland, Portugal and Spain demanding equal terms and, oh yes, Spain will be in the hand-out line soon enough along with their banks.
Perhaps that all of this has gone on for so long or perhaps because we keep hearing the cries of “Wolf” each week for the last several years that the markets are impervious to any new cries for help. An odd kind of complacency seems to have set in where nothing matters too much and everything will just be fine. Yesterday’s equity market rally based upon the central banks providing liquidity is just what any serious observer would expect and yet the stock markets rallied as if this was something out of the ordinary which clearly demonstrates either the market’s lack of understanding of real world events or it represents the hype of some hedge fund that was tossed around in the media like it was a new product at Apple. In any event, don’t wake up on Monday morning and think that Greece will have left the Eurozone and returned to the Drachma. That is not how things will play out.
At some point, in the next few weeks, it will come down to a calculation of just how much money the EU is willing to spend to support Greece and not cause a default and if Greece is to leave the Euro I think it is much more likely that they will be forced out rather than leave on their own decision. In the meantime the situation in Spain will worsen as the needs of their banks and of their Regional debts throw the country past the borderline of self-help. Aid will be called for in increments and it will probably total $350-400 billion by the time the final tally is made. Europe cannot afford this and I would not be surprised to see one of the funding countries saying that is it for them which will throw Europe into a tailspin. Effectively there are bank runs underway in both Greece and Spain currently and while no central bank will talk about it and no politician mentions it there is every indication that this is what is taking place each and every day now. It would not surprise me to see the imposition of capital controls and then a new round of havoc will ensue.
In the final analysis it probably all comes down to what price the Germans are willing to pay for dominating Europe. I suspect that when the Germans find themselves with a lower standard of living for paying off everyone else’s debt that the mood in Berlin will become much more somber as the cost of “living the dream” becomes so burdensome that tempers begin to flare. The French and the troubled nations are all calling for a single standard of living really and I just cannot imagine that Germany is ready to undertake that cost without serious consternation. Due to the recession and to the European methodology of counting debt to GDP ratios and to their allowance of “funny accounting” at their banks the downgrades continue, such is in the Netherlands today, and you can see the financial deterioration that is taking place all across Europe. The European Union is sinking under its own weight and it is not only questionable if the Germans and their partners want to pay but if they have the capacity to pay without all of Europe becoming a BBB+ credit if, to quote Chancellor Merkel, “more Europe” actually takes place.
“Enter Stranger, but take heed
Of what awaits the sin of greed
For those who take but do not earn,
Must pay dearly in their turn.
-The Front Doors of Gringott’s Bank
»
- 24026 reads
- Printer-friendly version
- Send to friend
- advertisements -
Just received this email from FXPRO:
IMPORTANT INFORMATION: Possible Extreme Volatility expected due to Greek ElectionsDear Client,
As you are aware on Sunday 17th of June, Greece will be holding another election in a second attempt to form a government. In contrast to the previous elections on 6th of May, these will have major consequences linked to them and it is highly expected that they will result in exceptional market volatility regardless of the outcome.
The threat of a significant gap during market opening, combined with the likelihood of the Banks and other liquidity providers to the forex market substantially widening their spreads and/or even suspending trading completely for an amount of time, indicates almost certainly that this is not a suitable trading environment to speculate.
It is strongly suggested that you consider closing and/or reducing positions prior to close of the market on Friday and take serious consideration of the risks you may face by trading during the early hours of Monday morning, prior to the markets settling. If you are planning to trade, it is highly recommended that you ensure you have sufficient information on the possible outcomes of the election, how these outcomes could affect the market and seek independent advise if necessary.
I do believe that this has been the objective all along...
I used to care, but things have changed...
I hate the MoFos, but the G20 rumor was a stroke of genius. If that had not occured I would bet the SP would be nearing 1300 right now.
"Do you wish to know whether that day is coming? Watch money. Money is the barometer of a society's virtue. When you see that trading is done, not by consent, but by compulsion – when you see that in order to produce, you need to obtain permission from men who produce nothing – when you see that money is flowing to those who deal, not in goods, but in favors – when you see that men get richer by graft and by pull than by work, and your laws don't protect you against them, but protect them against you – when you see corruption being rewarded and honesty becoming a self-sacrifice – you may know that your society is doomed. Money is so noble a medium that it does not compete with guns and it does not make terms with brutality. It will not permit a country to survive as half-property, half-loot.
"Whenever destroyers appear among men, they start by destroying money, for money is men's protection and the base of a moral existence. Destroyers seize gold and leave to its owners a counterfeit pile of paper. This kills all objective standards and delivers men into the arbitrary power of an arbitrary setter of values. Gold was an objective value, an equivalent of wealth produced. Paper is a mortgage on wealth that does not exist, backed by a gun aimed at those who are expected to produce it. Paper is a check drawn by legal looters upon an account which is not theirs: upon the virtue of the victims. Watch for the day when it becomes, marked: 'Account overdrawn.'
There are no nations. There are no peoples. There are no Russians. There are no Arabs. There are no third worlds. There is no West. There is only one holistic system of systems, one vast and immane, interwoven, interacting, multivariate, multinational dominion of dollars. Petro-dollars, electro-dollars, multi-dollars, reichmarks, rins, rubles, pounds, and shekels. It is the international system of currency which determines the totality of life on this planet. That is the natural order of things today.
I want to make a point here without getting into a religious or good vs evil political argument.
For those who believe - Islam is the one way of life or being that has so far resisted the siren song of western multicultural power and control, because it is seen as a power unto itself at the individual person level (family, religion, governance.)
No value judgements, just pointing to the Arab spring and what is happening in Egypt.
Takbir.
never say never...
diy candles for when tshtf
It is more about individuals than it is about conspiracies. Bankers do what is good for themselves, politicians do what is good for themselves, bearocrats do what is good for themselves, investors do what is good for themselves. They comingle like the influences on the weather, the results are the results. Everything is cyclical and reactive to it's environment.
It is more about individuals than it is about conspiracies. Bankers do what is good for themselves, politicians do what is good for themselves, bearocrats do what is good for themselves, investors do what is good for themselves. They comingle like the influences on the weather, the results are the results. Everything is cyclical and reactive to it's environment.
There's just not a whole lot of play to bet on the end of the world ....
....because, even if you win, who is going to pay off? Or collect it? And what would you do with it even if you got it?
Such certainty. I feel safer already.
The Mayan delusionists say 12/21/2012, I'm holding out for the 100y anniversary of the Federal Reserve.
Oh how pesky that $2=3Trillion in German unification costs that was diffused through exports to Southern EU partners with looads of debt. The Spanish bailout will definitely top $500B and what a circle jerk joke: where is the funding to come from the ESm that is not even in existence. Who will it go to, recapitalizing the Spanish banks. Not. Another circle jerk from Spain s government to the banks and back through sovereign bond purchases by the banks to the government.
Ah and what of Italy, 20% of EU that has to borrow above 6% and loan to Spain at 3% - and so contagion goes.
Or like the "hot potato" game the last one left holding the bag will be in the most trouble: France? Lots of debt to the troubled, Germany ?? even if they end the game sooner rather than later and economy 50% based on exports while the whole world sinks does not portend well for Ms. Mecuric Acid.
Funny how it (karma) all moves in a circle.
http://www.bloomberg.com/news/2012-06-14/king-says-stimulus-case-growing...
The first liquidity hose: the sterling and have we not seen this tape before: pause, rewind, play. The centrals all will jump over the cliff together.
Out comes the Sterling liquidity hose: as futile as the efforts to put out the fires in CO and New Mexico.Three Blind Mice - Bernanke, King and Draghi
Three Blind Mice Three blind mice see how they run see how they run
They all run after the bankers wife
Who cut off their balls with
A carving knife
Did you ever see such a sight in your life
As three blind mice
Dear Client,
This coming Monday may suck a bit more than usual.
Meh.
Let the vodka bottle linger a bit longer over that glass of V8.
Cheers.
It doesn't need to 'suck' per se. We knew all this was coming eventually. It's just time to execute whatever your particular "hunker-down" plan is.
Get some extra frozen pizzas, gas up the car and turn on some netflix (or whatever). Let whatever is going to happen, happen. And don't sweat it.
Frankly, I look forward to it: the welcome return of rational, human response to years of irrational market behavior.
Obviously, as much of money supply consists essentially of numbers. What will cause problems is a resource crunch.
Scare the sh*t out of the masses and they will agree to what ever TPTB want to do.
Maybe a truly united Europe, politically, monetarily and militarily, is on the agenda.