So if this does come about, what is the best approach to profit?Is there a way that that an average investor can short Greek debt?
When sovereign nations welch on IUOs, it sets a very bad tone. This is not good.The citizens of Greece should be ashamed of themselves.
Benji,Such a naive and myopic view. If only Greece could print as many unbacked IOU's as the US!Maybe the EURO is holding up against the greenback but is that a vote of confidence in the EURO, US, or neither?And whose next? These things are never contained. See Bernanke speech on the containment of the housing market bust.
Latest Greenspan quote."The probability that we will go through the next two or three years with no bond-market problems, no inflation problems, is probably better than 50-50," he said. "But not much."
These and weather forecasts are right about 50% of the time.
A Greek default will be no surprise -- the world is only now beginning to understand that the economic status quo is on a slippery slope -- the reality is more likely to be on the side to which the global economy falls, be that inflation or default -- in the final analysis, if the status quo fails (sustained moderate inflation, unemployment, and growth), then the preferred outcome will be inflation (and its multitude of concomitant severities) or default (and its concomitant calamities) -- we should all hope that inflation is the outcome rather than default...
PS: Whatever happens in Greece, Spain, and Portugal will likely signal what might happen in the US states, starting with California...
Scott,As usual, I think you have this pegged pretty good. I doubt there is a portfolio manager on the planet that a Greek default/restructure would surprise. The bears will (again) say ______ is next and then ______, etc. and they may be correct. More than one periferal European country may need to resort to such but the problem is widely recognized and its nothing that has not happened before. I do expect the news when it comes to have a short term market effect but as you say the global economy won't be affected much.Doc McKib,It appears to me that the central banks are clearly determined that the seesaw will tilt toward inflation. How the states' finances play out will be fascinating to watch. Many are quickly getting the fiscal religion so perhaps most can muddle through. If there is a fairly robust economic recovery over the next few years austerity coupled with rising tax receipts might keep the wolf from the door. The US economy, even as maligned as it is, should be preferable to Greece or Portugal's.
John,Hoping for a fairly robust recovery is just that...hope is a good thing but can lead to disaster when you dont prepare for hope failing....the us economy is propped up by gov. money...China inflation will kill the global hope rally..
Public Library-I do not think it is myopic or naive to hold the position that a nation-state welching on its legal, contractual obligations in bond markets is a bad idea.Greek citizens could solve their problems just by developing a good tax code, and cutting outlays. Instead, they are set to say FU to bondholders who actually believed that sovereign debt was supposed to be as close to sacred as we have in a secular world. Yes, we print dollars. It gives us an option other do not have. If we did not have that option, I would expect to cut outlays to balance the budget. Hell, I want to do that anyway. Moral hazard? Now, explain to me why I should pay back my debts. AIG, Greece, GM etc etc etc., they don't pay back their debts. This is a bad idea.
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