Financial news and stock markets.

[harkaz]

Thanks for the upload scarface. I'll test it when I have some free time.

Ready for grexit. Negotiations in Brussels failed tonight. This Monday will be most stressful for Greek banks. Unless the goverment decides to impose capital controls (they don't want to do it at all) there will be a bank failure in the next days.

[scarface]

Harkaz is right, time is running out for Greece, and Im afraid there might be no good solution.
The trend is still bearish on the financial markets. I have an objective situated at 10800 on the dax, but it could go much lower, depending on the future events.

There was a traffic jam this morning at the porte d'Asnières. There were so many motorcycles that they were using the sidewalk to sneak in. Paris is not really the garden of Eden where you would like to be. Probably harkaz is better off in Greece, swimming off the coast of Athens

[scarface]

Harkaz warned us about Greece's bailout stalemate on Sunday evening.
What's more, Italian and Spanish bonds dropped today, pushing the extra yield investors demand to hold 10-year securities over German debt to the most since October.


Consequently we have seen stocks crumbling in Europe, the dax losing 1.89% and the Athens stocks exchange plummeting by 4.68%.

[humbert]

In a way Greek governments are responsible for the situation that exists over there.  It seems they don't understand the basic notion that you cannot make 1â,¬ and spend 2â,¬. Now they have to bite the bullet. Seems to me that country needs surgery without anesthesia.

[harkaz]

In a way Greek governments are responsible for the situation that exists over there.  It seems they don't understand the basic notion that you cannot make 1â,¬ and spend 2â,¬. Now they have to bite the bullet. Seems to me that country needs surgery without anesthesia.

At this moment, Greece is required to make 2â,¬ and pay 1â,¬ to the creditors. The ideal for the economy would be low primary surplus targets over a great period of time.
Anyway, the name of the surgery is already known: Ukraine II

[harkaz]

@humbert

The Greek crisis started, as you know, in 2010, when George Papandreou's government decided to sign a loan agreement with EU member states, ECB and the IMF. Greece was unable to honor its debt commitments. Papandreou was forced to sign to protect the eurosystem (including Greek banks of course) from failure. He decided to turn the great primary deficit of about 13% GDP to a primary surplus.  He said that Greece would be back in the markets by 2012. Many Greeks regarded -and still regard- Papandreou as a traitor, because he allegedly increased the deficit on purpose, in coordination with EUROSTAT and he bailed out the insolvent Greek banks, giving the elite enough time to withdraw their money abroad, while the Greek economy was collapsing. When Papandreou decided to organise a referendum about a greek exit from the Eurozone, his government was overthrown.
Then Loukas Papadhmos organised the PSI, and the EFSF took full control of the Greek debt. Grexit speculation was extremely high in summer 2012, when Antonis Samaras was elected as PM. He tried to stabilize the economy and until 2014 it seemed that he controlled the situation. He gradually reduced pensions and wages but he was unwilling to reform the official sector. He created a "false surplus" by imposing high taxes. He is particularly hated for his ENFIA law (tax on real state) which made real estate value drop by 40%. He failed to reach a deal with creditors and he was overthrown by SYRIZA. SYRIZA came to power as a semi-communist, anti-austerity party which promised increases in official sector wages and decreasing unemployment by employing more people in the official sector. They also promised to tear the memorandum of understanding and restore everything in '2010 state' (All of these could be done in the Eurosystem of course, they promised, because creditors "couldn't reject their proposals").

In these 5 years GDP has fallen by more than 25% and 130 billion â,¬ of deposits flew away from Greek banks. No structural reforms have been made and corruption remains huge. Unemployment is rather high (over 25%), but young people can *still* stay afloat with the pensions and salaries of their parents and grandparents. More and more Greek companies are closed due to high debts.

The pro-EU/anti-EU percentage ratio is about 65/35 at this monent. If there is a deal between creditors and Greece for an extension of the current program until November (unlikely) I estimate this ratio will almost become 50/50 by then, and civil unrest will be likely enough. It is imperative to reduce the tax load and start real reforms, now or never. OSI is required.

And this helps me explain why I believe Greece will become Ukraine II. The former Ukrainian president was overthrown by CIA-supported "protestors" who revolted when he decided to abandon the country's EU integration path. The Ukrainian citizens who were against the entry to EU revolted as well against the protestors. A civil war started. Putin decided to annex Crimea to protect Russia's military interests in the Black Sea. NATO and EU found this as an excuse to start a new "Cold war era".

Similarily, Greece is a NATO and EU member with great financial and geopolitical problems. When a leftist government decides to demand a 'status quo' change in Europe and many Greek people (for various reasons) are thinking of Grexit as an opportunity, Putin decides to support the government. This could also cause a civil unrest/war situation. I think a better term would be RUkraine - Reverse Ukraine, because the Ukrainian crisis was triggered when the country tried to enter the EU, while Greek crisis will be triggered when it tries to exit the EU.

[harkaz]

A historic Der Spiegel cover in my opinion:



Three days before the final chance to avoid capital controls and civil unrest in Greece.

[humbert]

@Harkaz - Thanks so much for your explanation. I screen captured it so I could read it calmly and get a good idea of what's happening. Let me ask you this - these people who are against austerity, how do they expect the government to lower taxes and continue paying benefits as if nothing were happening? Do they think money grows on trees or what?

As for Ukraine, even if Poroshenko and Yatsenyuk got into power with help from the CIA, how does this give Russia the right to annex Crimea or support armed rebellion in the country's east? Besides, with all the land Russia has, what do they want with Crimea unless it's just to cause trouble?

@Scarface - regarding studios and other Paris living spaces, it seems to me the market dictates the price. Accordingly, if these places become so expensive that no one can afford them, then the price has to come down or the seller will be stuck with them forever. Do you agree?

[harkaz]

@humbert

@Harkaz - Thanks so much for your explanation. I screen captured it so I could read it calmly and get a good idea of what's happening. Let me ask you this - these people who are against austerity, how do they expect the government to lower taxes and continue paying benefits as if nothing were happening? Do they think money grows on trees or what?

As for Ukraine, even if Poroshenko and Yatsenyuk got into power with help from the CIA, how does this give Russia the right to annex Crimea or support armed rebellion in the country's east? Besides, with all the land Russia has, what do they want with Crimea unless it's just to cause trouble?

People against austerity working in the official sector are often anything but productive. Some of them have not even gone to university, but have been receiving rather high salaries for political reasons.
Moreover, many young people are NOT willing/available to support the real economy. Most of them prefer to stay afloat with money from their grandparent's pensions than trying to innovate and make their own money, so they can be financially independent. On the other hand, the private sector has become completely dependent on the official sector, via various provisions. Many companies are closed, not because of austerity but due to bad management. Corruption and parasitism are common in Greek society. This explains why unemployment stays that high for such a long period of time. This situation shifts the load to more productive people who cannot lift all of it. For these reasons, anti-austerity has become very popular among Greek people.
In the meanwhile, an mounting demographic issue threatens to kill the Greek society completely. Even more young people are fleeing abroad and usually they're the most productive and talented. Greece is effectively in 'self-destruct' mode.
A Grexit is regarded by some people as a fresh start that could solve the problem. Indeed a primary surplus +3.5% (required by the current program) is not feasible for a country like that.

About Ukraine, Russia has a naval base in Crimea. Since the locals accepted their annexation by the Russian federation via referendum, there is no real reason to start a cold war about it. The civil war in Ukraine wouldn't be caused if the US government didn't interfere too much in the area. There are MANY people in Ukraine whose parents are Russians and they wouldn't accept a forced entry to the EU/NATO at all. I believe that both sides are responsible for the situation. And the issue won't be resolved any time soon.

[humbert]

That's a very interesting explanation of what's going on in Ukraine. It's important to get feedback from informed guys like you. The news media is very unreliable and biased - on both sides! The only part of your explanation I have a hard time believing is the possibility of WW3. The MAD (Mutually Assured Destruction) concept is precisely what prevented this during the tense years of the cold war, and is very much still in effect. Tensions that exist today can't possibly be compared to how it was before the USSR collapsed.

I still don't understand why Russia is so afraid of NATO expanding eastward. Another Operation Barbarossa is out of the question, and so is nuclear war. What are they afraid of?

Harkaz's explanation regarding those who oppose austerity still lacks an answer to a fundamental question - with the country bankrupt and in financial default, how do you fund the benefits they'd miss if austerity were imposed? I guess only way is to return to the Drachma, and then print enough Drachmas to pay everybody. The only problem with this is Greece will be just like 1920's pre-Hitler Germany where inflation was out of control. Sadly we all know what happened afterwards.