Friday, June 17, 2011

Why Greece is not Lehman 2.0

The Blame Game © fintag

News comments:
Greece is being called the new Lehman.

There are similarities. Lehman was in denial as to its over indebted balance sheet and Greece is too. Lehman had the Fed as its lender of last resort. Greece has the ECB as its lender of last resort. The Fed said no and the ECB may do the same.

The difference here is the ECB is bankrupt and the Germans and French have to save Greece because its banks are indebted to Greece big time.

The media may want Greece to crash but it wont. If it does I will eat my shoes. Again.

Today's shorts:
A cheap vacation (lonely planet)

Today's longs:
Germans agree to bail out Greece (reuters)

Greece to sell its people.

Reuters: A graphic that sums up the Greek Problem


Tuesday, June 14, 2011

Greece gets a D

Alpha Bank © fintag

News comments:
Greece. I am going there on vacation in the summer. And then I read the country is now the worst rated in the world. (telegraph) / (ft)

Surely this is not possible? It has the might of the Europe supporting it. There is no way the Germans or French will let Greece down. If Greece goes, then who is next? And that will be the end of the Euro.

Latin America has been through this process before and it has survived and some would say is even stronger than before. Ok, they have resources and sold themselves out to the Chinese but Greece has sand and sun and history and olives.

In the mean time I thought I would open a term deposit at Alpha Bank. The rates are negotiable ....

Today's shorts:
Facebook worth USD100bn according to Goldman (telegraph)

Today's longs:
Facebook losing users (telegraph)

Facebook to be the new MySpace by 2014.

Friday, June 3, 2011

Is the USA turning Greek?

Greece © fintag

News comments:
Credit Rating Agencies are like snails.

They were slow to recognise their rubber stamping of subprime debt was too punchy and slowly downgraded junk way after it was junk. Look at Greece. It has been junk since it joined the EU.

Take the USA. It has way too much debt but because it has the world's currency it can print its way out of trouble. Greece is bust but thankfully the Greeks can rely on the EU, ECB and IMF to help fund its excesses. The USA has nobody to help bail it out. The Middle East so badly burned by Lehman has a long memory. The Chinese whose contract of "we will buy your debt if you keep off our hugely undervalued currency" is starting to look wobbly.

Once commodities are no longer priced in USD, America will go the way of Greece. This sounds dramatic but it will. As a country it can be completely self sufficient and that is its last hope. Why doesn't Obama bang tarriffs on foreign imports? He could but needs these foreigners to flood the USA will cheap goods it cannot produce. An aging population and lazy young workers. China is cheap because it has cheap labour. Its raw material costs are high because of its low currency and that is why it is buying up Africa and Australia.

Moodys is now looking at putting the USA's AAA rating on watch. And then it will be downgraded. Its yeilds will go up and Bernanke will have to print even more. Not very pleasant.

Today's shorts:
US unemployment moves towards 10% (telegraph)

Run on Greek banks inevitable (afp)

Today's longs:
IMF is cool with Greece. Says Greece (reuters)

America to double dip.

Thursday, June 2, 2011

Goldman Sachs: How the mighty fall

Goldman Sachs © fintag

News comments:
Those of you who were with me during the credit crunch recall I frequently said Goldman Sachs would be caught out.

They have had a few shaves and paid a few dollars in fines. The firm itself is internally in turmoil as it tries to reinvent what its brand is. There is a great book on the history of Goldman and when the institution started out, the Client came first. In recent years Goldman and its partners came first and the Client was there to be screwed.

The hysterically funny Libyian trade is a example (telegraph).

Bloomberg reports subpoenas are out.

Today's shorts:
Goldman Sachs (guardian)

Today's longs:
Goldman Sachs - still a great place to work for (GS)

Goldman Sachs to rename itself Fluffy Puppy.