Time For Europe To Cut Its Losses

George Yacik - INO.com Contributor - Fed & Interest Rates

One of the most exasperating novels I've ever read is Of Human Bondage by W. Somerset Maugham. The "hero" of the novel, Philip Carey, is hopelessly infatuated with Mildred Rogers, an unattractive, sickly, boorish shop girl several social rungs lower than himself. She takes horrible advantage of the good-natured generosity and sincerity of Carey, who time after time bails Mildred out of one self-created problem after another, only to be kicked in the pants (figuratively, of course) for his trouble and good intentions. And yet he continually comes back for more.

While you're reading the book (or watching one of the movies based on it), you keep asking yourself: When the heck is Carey ever going to wake up and smell the coffee?

Does this sound like any current European crisis you may have read about recently in the financial media? Continue reading "Time For Europe To Cut Its Losses"

The "NO" Vote Heard Around The World

I am sure by now you have heard that the citizens of Greece voted no to austerity and the latest deal that was presented to their country.

Here's a question for you, how is it that a small country like Greece with only 6.6 million people can suck in so much money from the international banking community?

It may be just a normal part of the Greek culture that they use deception to get what they want. Look back in history it started with the Trojan horse that the Greeks used to enter the city of Troy and win that war.

More recently in order to gain entry and acceptance into the European Union in 1981 and to later adopt the euro as its official currency in 2001. This was all done with deception, as the Greeks stated that their debt to GDP was 5% when in reality it was 15% and on an unsustainable track. I am sure that the Greeks looked upon it as another Trojan horse and they got what they wanted.

To put this perspective, the Greek economy only accounts for 2/10 of one percent of the world economy. In other words, it's not an economic powerhouse by anyone's imagination.

The question now is with the contentious Greek finance minister Yanis Varoufakis resigning shortly after the 61.3% NO vote, can Greece make a deal. His departure/removal was a clear gesture by Prime Minister Alexis Tsipras that he wants to begin fresh debt renegotiation.

The vote is indicating that Greek people did not want, nor would accept more austerity for their poor beleaguered country. Who in their right mind would vote to hurt and punish themselves? It was a brilliant political move by Prime Minister Alexis Tsipras to call the referendum when he did.

Okay, now for the big question, what's this No vote going to do to the markets? Continue reading "The "NO" Vote Heard Around The World"

Grexit: Hope For The Worst?

Lior Alkalay - INO.com Contributor - Forex

Are we experiencing the beginning of the end for the euro? For roughly three years, it seems as though politicians have been kicking the can down the road, putting off the apocalypse right at the last minute. And investors in the currency have had their patience stretched to the limit, vacillating between no hope and naivety that the Greek problem had gone away.

After Greece came Spain, Portugal, Italy and Ireland, but while the rest have been able to curb the risk and get a grip on things, the Greek problem has kept coming back. Now it seems that we've reached the end, the moment of truth, what investors have been dreading for the last three years – that Greece will eventually default and leave the Eurozone, and that it will spell the end of the euro. But now that the end has come, it seems as though investors have not only learned to live with the idea of a Grexit but to actually want it. The saying goes that you have to hope for the best and prepare for the worst, and more and more voices are indicating that some institutional investors are now hoping for the worst, for Greece to leave the euro. But why? Continue reading "Grexit: Hope For The Worst?"

Their Greece, And Now Ours

George Yacik - INO.com Contributor - Fed & Interest Rates

"You mean, you were serious?"

You can just hear Greek Prime Minister Alexis Tsipras asking the European Central Bank that question after the ECB called his bluff and refused to advance Greek banks any more emergency funds, forcing them to close for at least a week and the Athens stock market to also suspend trading. Needless to say, Greece will default on a $1.7 billion debt payment to the International Monetary Fund that comes due June 30.

Until the ECB finally learned how to say No (or, in this case, Nein) over the weekend, Tsipras was confident that his following the J. Paul Getty school of financial negotiating ("If you owe the bank $100, that's your problem. If you owe the bank $100 million, that's the bank's problem") would work and that the ECB and its fellow official creditors to Greece would eventually knuckle under to his anti-austerity demands and continue to kick the can down the road yet again. Continue reading "Their Greece, And Now Ours"

Greece Is Not A Black Swan Event

It seems like this never-ending, ongoing Greek tragedy is like an Energizer battery as it just keeps going and going and going.

In order for something to qualify as a "black swan event", it has to come out of the blue and be a total surprise to the market. Certainly, Greece cannot claim to have just happened or come out of the blue. It seems like this train wreck of a country has been going on forever without a resolution. The fact that the markets are only down a bit as of this writing and have the potential to close unchanged indicates that most of the US equity markets have already discounted the "Greek Effect".

Today I will be looking at all the major indices and commenting on what has taken place. Continue reading "Greece Is Not A Black Swan Event"