Monday morning stocks might be a roller coaster ride.
[i]From US News & World Report:
Greece lurched into uncharted territory and an uncertain future in Europe’s common currency Sunday after voters overwhelmingly rejected demands by international creditors for more austerity measures in exchange for a bailout of its bankrupt economy.
Results showed about 61 percent voted “no,” compared with 39 percent for “yes,” with 100 percent of the vote counted. The referendum — Greece’s first in more than four decades — came amid severe restrictions on financial transactions in the country, imposed last week to stem a bank run that accelerated after the vote was called.
Thousands of jubilant government supporters celebrated in Syntagma Square in front of Parliament, waving Greek flags and chanting “No, no, no!”
Early trading on Asian markets indicated investors were alarmed, as stock indexes fell.[/i]
Fallout from this one could be wild. Sorta of a global version of “40% of card holders can’t pay off their balance so interest rates and fees go up accordingly for the other 60%.”
Glad our economy is tied to the global market and we are mostly service oriented. That should shake out awesome when everyone is assessed according to true value contributions.
Maybe we can sneak across the border and get some of those cool NAFTA jobs.
This has the potential to play out as a contagion much like Lehman in 2008. Having one country, Greece, default and exit opens the reality that Spain, Portugal, and Ireland suck and should be shown the door. Quickly the dominos can fall just like Wachovia and Merrill Lynch.
To be fair, we are on a very similar trajectory as Greece and what they are experiencing is a microcosm of our future. Look at their issues and see the similarities:
massive government spending on entitlements, social programs, and government pensions - a truly epic welfare state
massive illegal immigration
crumbling social institution such as the GOC
Granted, we may have a softer landing due to some advantages (dollar is the reserve currency, ability to print money). However, we also have a lot more guns which makes for good times when the militia become, shall we say “poorly regulated.”
Sad testament of our global society when people have such an entitlement mindset that they blow all their money, get multiple loans, blow that, and get upset/offended that the people loaning them money have the audacity to tell them to cut back on spending.
I’ve already decided to declare myself the King of Kansas, or at least as much of it as I can grab. :big_boss:
Who holds Greek debt, and are there credit default swaps in place to lead you to believe this to be the case? I haven’t seen that and their economy is quite small. The rest of the PIIGS have already addressed their debt service issues - for instance Italy was given a new PM by Brussels and Ireland has reduced their borrowing drastically.
A majority voted to keep the gravy train going, even though it is painfully apparent that it is about to derail. Says something about human nature, and sadly that means us too: no one is gonna vote away that which is given to them and taken for granted.
The funny part of this is there is no gravy train to derail. Banks have already started raiding personal deposits to keep cash flow going. After that is exhausted they will have to switch to a new currency which will be worth crap.
The PM is simply delusional, as of this morning he has fired the FM stating that the guy was antagonizing the negotiators when it is the PM the negotiators want nothing to do with.
The strategy of forcing political change through orchestrated crisis. The “Cloward-Piven Strategy” seeks to hasten the fall of capitalism by overloading the government bureaucracy with a flood of impossible demands, thus pushing society into crisis and economic collapse.
You are kidding, right? A much simpler question is who does not have a stake in the €315B that Greece owes. The lenders range from the IMF, European Central Bank, to various bond holders (which may includes some of your 401K).
The real question is will depositors in other countries try to avoid risk and withdraw their savings in other marginal countries. Once you open the possibility of an exit and the irrevocability clause is no longer credible, people start to get queezy. This is especially true for foreign account holders who start to think that a euro held in cash today might be different than a euro in a bank tomorrow. I’m not saying that it is going to collapse the EU, but the risks of a very hard European landing are real.
Funny enough, thanks to the Greeks stubborn stance it has given them enough time to have things in place to mitigate their collapse. That is why the EU leaders tone have change on the subject the last 3 weeks. They honestly could give a shit if they exist now.
That is why the Greek PM is such a buffoon, it is armature hour at the negotiating table. The best offer they will receive was already on the table, they have no bargaining power left. As of this morning all the financial lenders have said they are making no offers, it is up to Greece to come up with an acceptable plan moving forward. If Greece does not act in a timely fashion and present an acceptable offer, the banks are now willing to let them implode. They will not be throwing good money after bad anymore.
Personally, I see this as an opportunity to buy more VTIAX or as an opportunity to Tax loss harvest in a taxable account. If anything actually comes of it.
Actually VXUS (the ETF equivalent of VTIAX) is only down 1.66% as of 11:11am EDT. That isn’t really that much.
Keep in mind that the total Greek GDP is less than .40% of the total world economy.
I think, like Sensei, the real threat is if other members of the EU decide that not playing by the rules is a better for them as well. If Spain, Portugal and Ireland decide to do the same thing, then you could start seeing some fallout.
But hey, even if that happens, a European vacation is probably going to get really cheap for holders of USD.
Without liquidity from the IMF or European Central Bank, the Greek banks will run out of money within a week. This will force the Greek government to issue a new currency as a stopgap to prevent mass hysteria. That will essentially remove the Greeks from the EU. Good riddance.
They’ve been throwing good money after bad for about 5 years now, and they’re just now figuring it out? I see this as not all Greece’s fault… In the first place, Greece should’ve never been admitted into the E.U. Their economy was never stable enough or strong enough. The loans should’ve stopped a long time ago, when it was around say, $60-80 billion and much more manageable. The E.U. should’ve let Greece have a orderly default years ago and worked a payment schedule out that was manageable for both parties… But instead, strict austerity was demanded… and this is the result. I suspect this could be the start of the unraveling of the E.U. and it couldn’t happen soon enough… The E.U. is, and always was a failure. There’s a lesson here for all of us, whether you agree with me, or not… What’s happening in Greece now, could very well be the U.S. in the near future… If you’re not prepared, you’d better start…
No, I am not kidding. The Greek debt is IMF and ECB. This isn’t a bunch of credit default swaps from Fannie Mae. The central banks are on the hook for this, and the Greek banks are going to do a bail-in to stay solvent. The bad thing here is giving the Cypriot model legs might temp others. The PIIGs collapse model is propaganda by ECB to scare you.