The Vast Greece Troika Disconnect
Greece is weighing heavily on markets again, as Greek Prime Minister Papademos and Greek politicians across all parties walk a political tightrope. At issue, the demands of its debtors to meet steep fiscal goals, upon which depends the fate of Greece. At play, likely elections that could see wholesale eviction of incumbents. At loss, the credibility of the Greek government, which promised Greeks there would be no new austerity.
Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.Relative tickers: NYSE: NBG, NYSE: OTE, NYSE: CCH, NYSE: TK, NYSE: NM, NYSE: NNA, NYSE: NMM, NYSE: TNP, NYSE: OSG, NYSE: ISH, NYSE: EXM, NYSE: SB, NYSE: SEA, NYSE: GNK, NYSE: DSX, NYSE: DAC, NYSE: TNP, NYSE: SFL, NYSE: NAT, NYSE: SSW, NYSE: GMR, NYSE: DHT, NYSE: MPX, Nasdaq: DRYS, Nasdaq: TOPS, Nasdaq: EGLE, Nasdaq: SINO, Nasdaq: PRGN, NYSE: KSP, Nasdaq: ESEA, Nasdaq: SBLK, Nasdaq: ONAV, Nasdaq: VLCCF, Nasdaq: TBSI, Nasdaq: GLNG, Nasdaq: XSEAX, Nasdaq: ACLI, NYSE: DB, Nasdaq: ITUB, NYSE: STD, NYSE: WBK, NYSE: UBS, NYSE: LYG, NYSE: BCS, NYSE: CS, NYSE: AIB, NYSE: BLX, NYSE: BAC, NYSE: C, NYSE: GS, NYSE: JPM, NYSE: MS, NYSE: EEA, Nasdaq: VEURX, NYSE: PEF, NYSE: EKH, NYSE: GUR, NYSE: EPV, NYSE: VEA, NYSE: DFE, NYSE: DEB, NYSE: IEV, NYSE: RNE, Nasdaq: SERAX, Nasdaq: SERBX, Nasdaq: FEUFX, Nasdaq: FIEUX, Nasdaq: IERAX, Nasdaq: PBEUX, Nasdaq: UEPIX, Nasdaq: PEUGX, Nasdaq: RYAEX
Greece Troika Disconnect
What seems a simple sell for the disconnected Germans and French, is political suicide for Greek politicians and economic torture for the Greek populace. It’s easy for the somewhat dependent yet disconnected European financiers to demand numerical goals be met, as they do not face the once again intensifying protests of the Greek people. The threatening words of Greek Finance Minister Evangelos Venizelos, that Greek default would only bring more difficult days for Greeks, are less believable with each passing day of despair. Meanwhile, opposition party leader Antonis Samaras, increasingly issues opposing rhetoric while quietly complying to the demands of the troika. The Greek people are not fools, though, and so Greece is left wide open for dangerous political change that could issue in a bold nationalist with a different view. Thus, Europe would be wiser to lower the bar for Greece, before losing it to Russia and/or China, despite blood ties.
It is precisely austerity which is keeping Greece from meeting budgetary goals, as the nation’s GDP faces a steepening uphill battle. Now the desperate actors are seeking even a reduction in the minimum wage. How dare they! The argument that Greece has made its own bed and can face the consequences if it doesn’t like Europe’s demands is losing credibility, because if Europe is sincere in its intention to preserve Greece’s membership in the euro zone, it should be to preserve Greece’s stability as well. Otherwise, it will end up with a Moldova like member that could weigh on its longer term progress besides costing it heavily today. Europe has to decide how far it is willing to hobble its partner for the sake of retaining it. I reiterate that austerity measures would be more effective if implemented over a longer time span, allowing for their less disruptive reformation of Greece’s economy.
As mentioned here in the past, the latest Greek delays may simply be wise posturing by Greek leaders intended to illustrate to Europe the parties’ codependence upon one another. It’s a wise strategy, if I see it correctly, after perhaps inspiring it even with my little column. As Portugal pivots and Spain shivers in fear, Merkel and Sarkozy might consider the political cost of too little support to Greece, should the entire ship sink with the dingy. I suspect Greek leaders might help their cause by bringing their friends home for a meeting in Athens, with a dose of good Greek hospitality. These days, that comes with a Molotov cocktail in the place of ouzo. I would suggest Greek hosts escort their allies through the fiery streets of the hard road Greece is being forced to traverse. It might just open the eyes of the disconnected to the human costs of austerity, and the economic damage of fiscal goals driven by pride and political prowess.
Surprisingly, the Global X FTSE Greece 20 ETF (NYSE: GREK) is holding near recently attained highs, I suppose on disbelief that this could end in Greek default rather than agreement at any cost. The iShares S&P Europe 350 Index ETF (NYSE: IEV) is similarly slanted. We’ll see how much the Greek people will bear.
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