What's that you say? The Greeks have worked it all out? Well by all means then I'm going to rush in and buy risk assets with both hands. Are there any sellers of anything left out there?
If you think this is the end of the Greek turmoil you are kidding yourself. At this point, the only thing that will eliminate the financial uncertainty is a hard default. The markets will only put up with this childishness for a little while longer.
The euro cognoscenti may regret all this effort before it's over.
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Am I too cynical for thinking that the sequence "OK we have a deal" followed by "Wait we need a referendum" followed by "Ok we don't need a referendum, we've got a deal" might just have been orchestrated for some industrial strength short selling?
Show me someone who made money on their industrial strength short selling and I'd say maybe you have a point. But it would have to be someone is not only industrially sized, but with both a short enough holding period, and some sort of reasonable connection to the actors in this process. In the meantime, most of the hedge fund actors that I know are throwing up their hands and running away from this mess on the assumption that valuing the probabilities on all this political risk is nuts. You can either do it badly or not do it at all.
This is really just a cluster----.
(this afternoon Sarkozy gave a fairly long speech in which (as far as I could tell from the wire service real time translation) there wasn't a single true word.
They couldn't have planned this if they tried.
So what will be the next domino to fall after Greece?
Spain?
Portugal?
Italy?
In the end, the only countries in Western Europe that might still be standing will be Switzerland, Germany, Luxembourg, and Lichtenstein.
Italy is the issue, that's why the French and Germans have been trying so hard to keep the Greeks from slipping over the edge. They don't a greasy stuffed grape leaf for what happens in Greece. they can collectivize themselves back to the 15th century for all the German's care.
But if Italy goes, (and it probably will) it's big enough to take the the whole system with it. they worked hard on taking over Europe without firing a shot, and they will be reluctant to give it up.
But I'm more convinced than ever that it will happen. If not ... then eventually. Increasingly their efforts to save things look pointlessly corrupt...like someone trying to rob an abandoned bank.
I'd say there's a good chance that Ireland could be next.
But we're really unimportant in the wider scheme of things. If Italy goes than that's it, the EU project (a political one at that) collapses.
Damo
One of Western Europe's biggest problem is demographics. Their most productive citizens are breeding well below replacement level.
At the same time, they have an ever increasing, hostile Islamic community that is having kids like mad. All on the dime of the productive citizens via generous welfare benefits. Frankly, these people are incapable of managing and expanding a modern civilization. They are to Europe today what the Vandals and Visigoths were to 5th century Rome.
In the end, I expect this situation to be 'resolved' through a lot of violence and bloodshed.
Europe will either have a second Renaissance (after a lot of pain), or it will descend into a level of chaos not seen since the 6th Century.
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