Keeping in mind that the words “hope” and “Greece” should almost never be used in the same sentence, here would be the one exception: Let’s “hope” markets aren’t rallying on “hope” for “Greece.”
Hope, apparently, does spring eternal, however, and it seems as though despite all the evidence to the contrary, there are still people out there with money to spend who believe that Greece can be rescued yet from its seemingly intractable fiscal position.
How else to explain Monday’s surge in the euro and drop in the US dollar, which had been rallying on well-placed hopes that the periphery of Europe was sliding further into the debt abyss and ready to implode?
Irrationality, we now can conclude, comes in many forms.
Also, Greece is incapable of growing its way out of debt, and the Maastricht agreement prevents it from devaluing or inflating its way out.
In short, Gartman is correct when he says, “the risk of an eventual debt restructuring has obviously not eased.”
“The can has been given a good solid kick down the road and for a day or two or a week or so the problem has been postponed, but the problem exists nonetheless,” he wrote. “Like aspirin applied directly to an ailing tooth, the pain has subsided of course but the decay still exists and the pain will come back at a later time and almost certainly shall be more severe, not less.”
From: http://ping.fm/GylUh
Tuesday, May 31, 2011
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Dr Martha Castro's Counter (SD: 10/28/11)
DR. MARTHA CASTRO THOUGHTS QUOTES
This is a problem for many countries in the Euro Zone. In fact we knew that this would be a problem 20 yrs ago. America showed that with large countries you get regional disparity and therefore poverty. De-valuing your currency is actually a smart move, since it boosts your exports. However, with any of the Euro countries tied to a single currency, this is not an option and we are going to see this in many EU countries.
ReplyDeleteOn another note, check out this guy:
http://www.youtube.com/watch?v=g6tJenFEEoA
Alex
This "isolation" thing is beyond me. If four of my neighbors have too much debt and are in the brink of a bankruptcy, will one of them be saved if I bail out the other three? If so, why?
ReplyDeleteGreece is the first domino, of course, but I'm wondering at what point the UK will fall.
ReplyDeleteAll the UK "austerity" shite in the world can't balance this mess. My guess is that the UK government is just trying to make sure we're not the first domino to fall.
Greece first... looks like we might be domino five or six.
Race you to the bottom, USA! - last one there's a rotten egg.
@UKbiker
ReplyDeleteGreek default is already a certainty and the probability of Portuguese default is increasing day by day. The end game for Euro may well be starting.