Friday, April 9, 2010

The death of Greece – the Euro to follow?

Anyone following the news ticking in about our olive-oiled friends down by the Aegean are either laughing or crying today. I am, of course, laughing. Remember, today is Friday, this is significant for market manipulators. I wonder what they will say during the weekend…

I will let the people over at ZeroHedge explain:
If this information is correct, it is all over. Bloomberg calculates the yield on the Greek 3 Month as determined by the bid, or where investors are willing to buy it, based on BVAL sources at 21.3%. In all honesty the bid/offer market in the 3 Month are all over the place. HDAT gives it as 99.650x99.840, BVAL is at 99.470x99.773. The HDAT bid implies a yield of 14.049%, which is still game over for Greece.

Greece plans to sell €600 million in 6 Month and €600 million in 12 Month Bills on April 13. Sorry, if the 3M is anywhere close to 14% bid (let alone 21%), this is not happening.

The Market Ticker thinks that:
Greece needs to pull out of the Euro now and take the hit. There is a point beyond which the spiral tightens beyond all reason, and they may already be into the vortex too far to do anything meaningful, but this much is certain – the longer they delay the worse it’s going to get.

I am not so sure about that myself. Defaulting, setting up their own currency and jumping ship may actually, at least in the short run, be much, much worse. Their best bet, from Greece’s point of view, is still to rely on the Eurozone to come and rescue them.

However, such a move is contingent on Germany actually allowing it to happen. And even IF that is the case, what about the ramifications? Can they break their own laws and bail out an entire country?

And IF they do we have Italy, Spain, Portugal and possibly Ireland waiting in the wings for their bailouts. In effect, bailing out Greece would be the coup de grâce of the Euro.

What? ‘IMF’ you say? Well, good luck with that one…

And don't come saying "no-one told you so", I did, many did. We've been saying it for years. Time to start paying attention soon?

Now put on the music and shake it baby

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