Skip to main content

Greece: The next hand is being played

So yesterday the ECB decided that Greece's debt (rated as junk by everybody) was no longer acceptable as collateral to allow the Greek banks to monetise their assets -- so that they can keep on paying out the Euros in drove to all Greeks who know the game is up.  In a nutshell the ECB decided that after a week in power the new socialist government needed a taste of "the baseball bat", mind you its just a taste (Greek banks can still get liquidity but via a less attractive and more costly route). The ECB and Bruxelles bureaucrats (and their elected officials) want one thing, and one thing only -- extend and pretend.  They want the troika back in town and they want the status quo re-instated.

The sad truth is that like Paris taxi drivers that protested the arrival of unknown Uber by going on strike, the ECB has shown themselves to be bullies.  The new Greek prime minister has made a number of speeches, and interviews, his ECB interlocutors have been caught a number of times with "errand microphones" saying exactly the wrong thing at the wrong time.  Bottom line, the Greek prime minister sounds reasonable -- he is winning the popularity contest (not to say that Greeks were not thieving bastards for years) still!

The sad truth is that Greece cannot repay its outstanding debts, the sooner this conversation occurs the faster the problems can be solved.  For Europe the problem is fundamental; the population (in Germany in particular) were sold a false bills of goods, they were told that integration would be cheap, they were told that this was going to be easy.  They were not told that fundamental flaws had been incorporated -- such as high inflation countries with low inflation countries, they were not told that the partially federated system -- with no real central power was poorly equipped to deal with errand "provinces" such as Greece -- that were borrowing like drunken sailors and had an incredibly high level of corruption, would easily solve all problems.

I'm not sur that Greece will be the winner here.  I'm not sure that the left can do this -- because if they fail, its the right that will take over, and Golden Dawn is far less fun then the socialists.  Lets not forget that America fought the Russians with the Taliban, the Americans armed the Taliban -- because the enemy of my enemy is my friend.  Look at what "friends" America has today... My guess is that Bruxelles and the ECB would rather have this fight another day, even if it means Golden Dawn -- which is not Neo-nazi, bur a full blown Nazi party.

So the ECB has decided to see what it can see, to test Athen's socialists.  Frankly, acting this way against a 10 day old government seems a bit...rash.  My guess is that they will do this for two weeks and back down, but the damage will have been done -- another Greek bank will go down the tube, and savers in Greece -- the very people who Bruxelles likes and wants to encourage will be made in the paupers, it may convince the rest of Greece that this Europe thing is really not worth the trouble.

Anyway, oil prices are back down to $48.99, the Euro is back at 1.14 to the USD.  All is well!


Popular posts from this blog

Trucker shortage? No a plan to allow driverless rigs

There are still articles on how America is running out of truckers -- and that its a huge problem, except its not a problem, if it was a problem salaries would rise to so that demand would clear. Trucking is one of those industry where the vast majority of participants are owner/operators and therefore free agents.

Salaries and cost are extremely well know, "industry" complains that there are not enough truckers, yet wages continue to fall... Therefore there are still too many truckers around, for if there was a shortage of supply prices would rise, and they don't.

What there is though is something different; there is a push to allow automatic rigs to "operate across the US", so to encourage the various authorities to allow self driving rigs you talk shortage and hope that politicians decided that "Well if people don't want to work, lets get robots to do the work" or words to that effect.

This has nothing to do with shortage of drivers, but every…

Every punter says oil prices are on the rise: Oil hits $48/bbl -- lowest since September 2016

What the hell?

How could this be, punters, advisors, investment bankers all agreed commodity prices  in general and oil prices in particular are on the rise...its a brave new era for producers and exporters -- finally the world is back and demand is going through the roof, except not so much!

What happened?  Well energy is complicated, the world operates in a balance -- 30 days of physical reserves is about all we've got (seriously) this is a just in time business.  So the long term trend always gets hit by short term variations.

Global production over the past 12 months has risen by somewhat less than 1.5% per annum.  As the world market changes production becomes less energy intensive (maybe), but the reality is that the world is growing more slowly -- America Q4 GDP growth was around 1.9% (annualized) Europe is going nowhere fast (the GDP growth in Germany is overshadowed by the lack of growth in France, Italy, Spain (lets say 27 Euro members generated a total GDP growth of 1.2…

Paying for research

This morning I was reading that CLSA -- since 2013 proudly owned by CITIC -- was shutting down its American equity research department -- 90 people will be affected!

Now the value of a lot of research is limited, that is not to say that all research is bad. In fact, I remember that GS's Asia Aerospace research was considered the bible for the sector.  Granted, there was little you could do with the research since the "buy" was for Chinese airlines...that were state owned.  Still it was a vey valuable tool in understanding the local dynamics.  It seems that the US has introduced new legislation that forces brokers to "sell" their research services!  Figures of $10,000 an hour have been mentioned...

Now, research can be sold many times; if GS has 5000/6000 clients they may sell the same research 300x or 400x (I exaggerate) but this is the key -- Those who buy the research are, I presume, prohibited from giving it away or selling it, at the same time the same rese…