Greek default a near certainty

by truthbetold Tue Oct 04, 2011 11:22 am

Based on available public news, Greeks are set to default. It could happen in Q4. But a november bailout fund insertion may postpone default for few months. But EU talk and actions seems to be resigned for a greek default. Their worry seems to be more in the direction of how to contain the fall out of default.

EU may not even call it default. It may set in a process of prolonged forced bond haircuts to cover up the default.

Euro may drop further significantly. germany may life it as it helps it exports.

US banks will get hammered. With upcoming Budget fight in November in washington, good news is hard to find. Market is completely dependent on policy makers and national and international dynamics.

Is this crisis in capitalism or is it crisis of capitalism?

by harharmahadev Tue Oct 04, 2011 12:00 pm

truthbetold wrote:Based on available public news, Greeks are set to default. It could happen in Q4. But a november bailout fund insertion may postpone default for few months. But EU talk and actions seems to be resigned for a greek default. Their worry seems to be more in the direction of how to contain the fall out of default.

EU may not even call it default. It may set in a process of prolonged forced bond haircuts to cover up the default.

Euro may drop further significantly. germany may life it as it helps it exports.

US banks will get hammered. With upcoming Budget fight in November in washington, good news is hard to find. Market is completely dependent on policy makers and national and international dynamics.

Is this crisis in capitalism or is it crisis of capitalism?

It's a debt crisis.

by truthbetold Tue Oct 04, 2011 12:59 pm

debt = capital

what is the answer to the question?

by harharmahadev Tue Oct 04, 2011 1:35 pm

Debt is not equal to capital.

Think about it. We can regroup in 15 mins.

by truthbetold Tue Oct 04, 2011 2:00 pm

Enough crap. If you have something useful, say it.

by harharmahadev Tue Oct 04, 2011 2:03 pm

truthbetold wrote:Enough crap. If you have something useful, say it.

Don't get upset. It's not nice.

by harharmahadev Tue Oct 04, 2011 2:06 pm

truthbetold wrote:Based on available public news, Greeks are set to default. It could happen in Q4. But a november bailout fund insertion may postpone default for few months. But EU talk and actions seems to be resigned for a greek default. Their worry seems to be more in the direction of how to contain the fall out of default.

EU may not even call it default. It may set in a process of prolonged forced bond haircuts to cover up the default.

Euro may drop further significantly. germany may life it as it helps it exports.

US banks will get hammered. With upcoming Budget fight in November in washington, good news is hard to find. Market is completely dependent on policy makers and national and international dynamics.

Is this crisis in capitalism or is it crisis of capitalism?

Ok. "Forced bond haircuts" constitutes a default. All rating agencies have made it clear that any change in the terms and conditions of the bond will be regarded as a default. Bond prices are almost factoring a default. So I think a default might cause a psychological black swan impact but it won't create a Lehman-style event.

The real black swan event is the slowdown / collapse of the emerging economies, specifically China and India. That's what is going to trigger a freefall.

by truthbetold Tue Oct 04, 2011 2:41 pm

what is the catalyst to trigger a china or India economic collapse? What is your definition of collapse of those economies?

World and central bankers are wiser to understand what happens when a Lehman style event takes place. But they have not executed an operation yet to prevent recurrence. So we will have to wait.

The interesting feature of current downward drift is the dollar strength and precipitous drop of gold in the middle of a screaming crisis.

by harharmahadev Tue Oct 04, 2011 3:29 pm

truthbetold wrote:what is the catalyst to trigger a china or India economic collapse? What is your definition of collapse of those economies?

World and central bankers are wiser to understand what happens when a Lehman style event takes place. But they have not executed an operation yet to prevent recurrence. So we will have to wait.

The interesting feature of current downward drift is the dollar strength and precipitous drop of gold in the middle of a screaming crisis.

My definition of collapse of those economies means when there is no real growth or when there is atrophied growth. In other words, some sectors grow rapidly because of distorted economic policies while the masses see a major destruction of their wealth.

A lot of companies have a significant % of their revenue/earnings coming from China and India. If these economies slow down, which they surely will, then there will be a slew of earnings disappointments and / or reduced projections. Some dude at Cisco or Microsoft or GE might issue a stark prognostication, which will reverberate across wall street.

Greece could be the black swan. American Airline bankruptcy could be another. BAC could default...who knows? There are too many variables.

However, I'm not shorting anything. I'm just paying down my mortgage and watching the action from a distance. The only shares I have are NLY, PTY, Pimco Total Returns, T, PML and PMX and that's it. I traded NG, MHLD, MSFT and many others. Wanted to get out of T but missed it. But have a shitload of cash on the sidelines. Also have a ton of gold. Gold, I think, will go down in the near term, if there is a significant liquidity crisis. But eventually, I think it will go up considerably.

by truthbetold Tue Oct 04, 2011 3:38 pm

The world wide soverign debt problem could trigger major calmitous events any time. But that was a possibility for the past decade. Finally the crisis seems to be engulfing all nations allowing no room to postpone. So expecting doom is a known forecast.

What are the early predictors? What can one do about those? How does one navigate a world wide crisis? One safe haven Gold is getting battered(at least for the time being).

Prediction of gloom is easy. Pointers to future and actions to survive are difficult to find.

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