[TheNegotiator]

So it looks like the Greeks have agreed a 5yr austerity plan to fix their economy. I would really want to see some details if I were a H/F manager with multi millions on the line. But it certainly seems to be just the tonic for stocks today.

IF it is what it looks like, my question is how long before we all forget this and realise there's a whole lot more wrong with the system? Or will it be back to buying the Fed?

[SIUYA]

see......http://www.traderslaboratory.com/for...e-mistake.html
for a similar take on Greece

[MadMarketScientist]

European Central Bank (ECB) President Jean-Claude Trichet said the Greek situation is now "code red." But this shouldn't be news to anyone ... just look at the Rydex CurrencyShares Euro Trust ETF



There is definitely a lot more wrong with the whole situation. I read ECB officials are trying to negotiate a deal where some of Greece's major creditors (large European banks) would extend loans at lower future interest rates because many people have purchased credit default swaps on Greek sovereign debt and a default would be BAD. People like JPMorgan, who's fell as much as 2.4% today.

I'm pretty sure the ECB will do as the Americans and try to paper over the sovereign defaults of Greece, Spain, and Italy. This should take the euro down to less than par with the U.S. dollar.

MMS

[BlowFish]

So it is fixable then, I guess they are fortunate then? To contrast the US national debt goes up by 4 billion a day (and has been for years) which makes the UK's trillion (total) seem paltry. I obviously don't understand macro economics but I wonder what these nations need to do to get junk status?

[SIUYA]

Originally Posted by BlowFish »

So it is fixable then, I guess they are fortunate then? To contrast the US national debt goes up by 4 billion a day (and has been for years) which makes the UK's trillion (total) seem paltry. I obviously don't understand macro economics but I wonder what these nations need to do to get junk status?

more importantly why is it that people keep trying to buy them and support their underlying flawed policies.....I guess macro is the same as day trading - some people just dont know when to cut losses, trade quantities beyond their capitalized base and then eventually when it all goes wrong look back shake their heads and say next time I will do it better.
The greater fool theory works in all aspects of the markets its just that the times frames are often different and the excuses vary - the reasons for the problems and the consequences are often the same.

Remember the Asian bond/currency crisis back in 1997, the markets were aware of the issues for months, and then one day the equity markets cracked. they bounced back quickly but at the time, they were in an uptrend and we did not have the issues the world has today.....so at some stage the musical chairs may stop. but the bounce may not be as good. As I understand it however, there is a a lot of cash sitting around at present, so maybe there are some wary people out there. The scary thing is if there is real contagion - I would be more worried about Italy and the European banks.

the one nice thing is that it can actually be reasonably and surprisingly easy to fix these spending deficit imbalances over short periods of time - I read a great macro economic paper years ago before these things were seemingly an issue (I never saved the paper) and they showed how quickly things can be turned around. Unfortunately it takes the will of the people and the politicians to do so, and that is not happening anywhere.

[MadMarketScientist]

Well the market is focused on Greece now. The crisis will play out one of two ways, Greece could reject the proposed austerity cuts, default on its debt,and destroy the European Union and the euro.

Or, the more likely scenario, major holders of Greek debt (the European banks) will "extend and pretend" and roll over their Greek debt. The French banks already rolled over about $30 billion of Greek debt. And we all know "extending and pretending" debts doesn't change any of the fundamental issues.

MMS

[TheNegotiator]

Greek parliament vote for austerity measures passes 155-138. Anyone else see this as surprisingly close given their current situation?

[Ingot54]

Originally Posted by TheNegotiator »

Greek parliament vote for austerity measures passes 155-138. Anyone else see this as surprisingly close given their current situation?

The market thought this was always going to happen - the event was a nothing-to-see here-move-along event.

Chuck Butler of the Daily Pfennig had this to say tonight:

Originally Posted by Chuck Butler of The Daily Pfennig;

And the 200 lb gorilla in the corner (China), is coming out of the corner to let everyone know that they believe in the Eurozone, and the euro, and will continue to support them.

Following up on his comments earlier this week, Chinese Premier, Wen Jiabao, (Wen) said that:

"The difficulties that have appeared in Europe are temporary.
As long as financial reforms and adjustments continue, the difficulties can be gradually overcome.
At Europe's time of difficulty, we reached out a helping hand.
We expressed confidence in Europe's economy and confidence in the euro.
We have also said that we will buy a certain amount of sovereign debt from some countries, according to needs."

Well. As long as he's not blowing smoke in our faces. That's the kind of stuff that helps a region like the Eurozone. and its currency, the euro.

So I guess the speculators that count (if you don't know who that is, it's not you) already "knew" that regardless of what the vote was, China was standing behind the keeper with a very large mitt.

Business as usual.

Now ... what to do about those pesky demonstrators ... you know the ones - those that are going to have to tighten their belts further - higher utility charges, pension and benefit cuts, higher taxation and duties and excise, surcharges on this-and-that ... yada yada.

I am looking at this as a dry run for when the circus is playing in a neighbourhood near mine ... probably sooner than one imagines. Australia has gone from factoring in a rates rise, to factoring in no rates rise, to probably factoring in a rates cut before Christmas.

Who knows? For those of you who still believe in prayer - remember the Greek people kindly - this was not of their making entirely. They didn't see it coming any more than we can currently see what is ahead for us.