Investors don't know what to make of Greece

Markets drop, and then rally, on different pieces of news about the country's future.

By Jim J. Jubak Sep 10, 2012 4:37PM
Sentiment and therefore market reaction to news from Greece Monday has been all over the block. Financial markets are having trouble deciding if news is good or bad -- and on what timetable.

Monday morning, markets were down on news that the troika of the International Monetary Fund, the European Commission, and the European Central Bank had rejected 3 billion euros of proposed cuts to Greek spending on the grounds that they were too vague and would take too long to put into effect. The troika has to approve the Greek plan in order for the country to get the next 31.5 billion euro installment from the 130 billion euro European rescue package agreed to in March. The country needs the money to recapitalize banks and to keep the economy running.

Post continues below.
And then markets rallied on publication of an article in Germany's Der Spiegel saying that German chancellor Angela Merkel had changed her mind on Greece and now wants to do everything she can to avoid a Greek exit from the euro. Everything she can turns out to be, according to the article, tweaking the Greek rescue program to give the country more time.

That was followed by a CNBC interview with Olli Rehn, European Commission for Economic
and Monetary Affairs and the Euro, that emphasized that it is critical that Greece stay in the euro.
The euro "is irreversible and it is essential that we will maintain the unity of the euro, Rehn said.

How this all adds up is tough to calculate. Has Merkel really changed her policy, as Der Spiegel argues? The Greeks seem to think so. That country’s Ta Nea has run a front-page illustration of Merkel in Greek national costume. Will Greek reaction lead Greek leaders to over reaction? Over the weekend Greek prime minister Antonis Samaras said that the latest proposed budget cuts will be the last that his government will offer until eurozone leaders "resolve the injustices" inflected on ordinary Greeks.

Wonder how that’s going over with troika budget examiners?

(And by the way, a report over the weekend said that Spain might not apply for a bond-buying program by the European Central Bank until after regional elections in Spain on Oct. 21. That would put off any buying of Spanish bonds by the ECB until after that date.)

At the time of this writing, Jim Jubak didn't own shares of any companies mentioned in this post in personal portfolios. The mutual fund he manages, Jubak Global Equity Fund (JUBAX), may or may not own positions in any stock mentioned. For a full list of the stocks in the fund as of the end of the most recent quarter, see the fund's portfolio here. 

16Comments
Sep 10, 2012 9:36PM
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Greece just doesn't want to recognize that the gig's up and the pussy footing around is only making their position worse.  They think they have the upper hand because they could cause trouble if the other countries don't play ball and give them more money. Except, this isn't some who-blinks-first game. If Germany and the other countries don't blink, Greece just boned their own people.
Sep 10, 2012 10:08PM
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This cheap Hollywood publicity campaign about Europe has been going on for years.  Europe is playing some investors like a fiddle.  We all know what these stall tactics are about.  Been laughing about it for years.  Who do they think they're fooling?  And our press covers it like it's news or something.  Yep, some dummies are going to get burned.  The rest, the wise investors, are buying gold, real estate (in America), GAIN, PNW, BA, MO,  and COP.

 

Even a blind pig finds an acorn now and then (unless it's driving a Chevy Volt).

 

 

 

 

Sep 10, 2012 10:02PM
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I am really glad that I am not a German citizen right now. At least my tax dollars are going to support the entitled ( wealthy bailed out CEO's and poor, no jobs here so but I won't move to where they are workers) people who at least share my citizenship, if not my work ethic.
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USA's  economy is becoming like Greece's thanks to that rock star BO.
Sep 11, 2012 7:42AM
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Greece is doing fine. It ousted a former Central Banker and a bunch of paper pushers from power. It burned it's banks down. It gave the EUC the middle finger, gesturing what they can do with those complex financial instruments. Who is on the hook? Goldman Sachs for concocting them and JP Morgan for the flawed flim flam that is derivative-formulated debt as currency. TWO American banks destroying ONE world. Greeks revived the Drachma at the local level and restored commitment to the fundamentals of self-sufficiency. The People of Greece have sufficient resources to weather the time it takes for everyone else to catch up. Iceland led the way. You can't invest in something like that-- yet.

 

You actually DO know where we are now. There are few relevent publicly traded stocks any longer. Apple and Google are NOT relevent at all. In fact, both are counter-relevent when you consider what we have to do to restore economy. The vast majority are financial platforms with minimal personnel, who import. Unemployment and under employment now comprise a majority, and with all our currency stuck overseas, a new useful currency is straight ahead. The old debt? That gets pinned to the foreheads of all the debt contract holders. We aren't dumb. We know Inflationists holding majority stock interests terminated careers to cause economic compression aided by fiat money printing owed to debt instruments. The greedy never trickled the new money into the economy so we had nothing to build small business revival with. Now, the same people have all the money AND the contracts. Makes it genuinely easy to cut them out of the equation and restore basic self-sufficiency. Just like Iceland. Just like Greece.

 

Dispute it all you want, but natural cyclical renewal trumps new world order and always should.

Sep 11, 2012 3:28AM
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The people of Greece did not ask for the Euro and the doubling and tripling of consumer goods costs that came with it...They did not tell their nations bankers to lose all their money on "creative mortgage backed securities", like our bankers did...They did not ask for the Euro-Bankers to bail out their buddies in Greece and have the regular people pay for it with their jobs, retirement accounts, savings accounts, and childrens college funds...Imagine what would have happened in the US if we were on the Euro and couldnt simply print more money to cover the bankers losses...Greece, Italy, Spain, Portugal, Ireland...are not Germany, yet the powers that be somehow believed these countries GDP could handle the 300% inflation that came with being on equal financial grounds with Germany...Before commenting on Greek people being lazy, or whatever, educate yourselves on what is really happening in the European financial world...Hazza provata...
Sep 11, 2012 7:41AM
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Just keep kicking the can a bit further down the road. Its worked well so far.

Sep 11, 2012 9:02AM
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Frankly,my dear; I don't give a damn about Greece.
Sep 11, 2012 8:29AM
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Just have the Greeks offer to join with the Arab League and good old uncle Sam will dump trillions in their lap .
Sep 11, 2012 4:38PM
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Hmmm....   I make Greece out to be a failed socialist state that can no longer borrow other peoples money to stay afloat.   So not they must go back to the dracma so they can see how long people will trade work for worthless fiat paper money.


I think that sums up Greece....

Sep 11, 2012 3:23AM
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Cut $3 billion to get $31.5 billion and the Greeks are complaining? What idiots. Never turn down OPP.

Europe is stalling in the hopes that we actually do something about our own debt issues but with this being an election year and the Do Nothing Tea Party Evangelicals controlling Congress that isn't going to happen in 2012. This is what the founding fathers warned about if you allow church and state to intertwine - a rise in fanaticism and chaos. The GOP has lost their way. It was sad to watch Romney and Ryan lie and lie and lie during the convention. Do they not remember what happened to Governor Ann Richards of Texas when she pulled that on George Bush, Jr.? He won by a landslide and her career ended in shame. The GOP needs a Centrist who can focus on real business and leave the religion behind in his own home. Do Republicans really think we are so stupid we need them controlling what we believe and what our children learn in school? Have they forgotten we have muslims, jews, hindi, buddhists and other religions in this country? Yes, they have and they don't care. This election will be a blow-out win for Obama. Secular Europe will be fine.

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