The bond traderΣτο προηγούμενο άρθρο ο ανύπαρκτος έκανε ένα σχόλιο για τα ελληνικά μου και την ορθρογραφία μου. Αν και δεν το συνηθίζω θα μου επιτρέψετε να κάνω ένα προσωπικό σχόλιο. Έχεις δίκιο φιλέ όχι δευτέρα ούτε πρώτη δημοτικού δεν πήγα. Τα ελληνικά ούτε που τα μιλούσα πριν 5 χρόνια γιατί έζησα 45 χρόνια στο εξωτερικό ξεκινώντας από την Νέα Υόρκη σε τέσσερεις διαφορετικές χώρες – μια από αυτές η Αργεντινή (όχι η Ουρουγουάη) πάντοτε σαν bond trader. Το ξέρω πόσο δύσκολο είναι για κάποιους να διαβάζουν ανορθόγραφα κείμενα. Και το σέβομαι. Έτσι αυτό το άρθρο θα γραφτεί στα αγγλικά. Διότι έχω μονό μισή ώρα και συνήθως με τα λίγα ελληνικά που ξέρω μου χρειάζονται πάνω από 4 ώρες και έχουμε bonds να πουλήσουμε.
Today is not a day of celebration.
Today a hungry homeless dog was thrown a piece of meat that has poison inside. The dog faces a dilemma. If it eats the meat it will die if it does not it will starve more today than yesterday and less than tomorrow.
The dog in this analogy is not Greece but the Government of Greece.
You see what the European Union offered today was in essence a bridge loan facility BUT we are not told what the TERMS are. As in the case of a bankrupt company the lenders of last resort always but always put THEIR terms on the table. I can assure you that the terms of this loan are so harsh that no government would dare touch it. It would mean the end of their tenure in a very short period of time. Thus looking out for their own interest they will likely try to go on their own.
In this case this is a futile undertaking. The states of the Greek State Finances are beyond recovery. This is a country whose investments have gone into non productive assets the largest employer is a bankrupt government and its number one industry – tourism- is uncompetitive because of its squandering of its capital. Most of us can not fathom what €400 billion means. The debt of Russia was €50 billion and it brought the country to its knees.
It is therefore unlikely that the government will meet the targets of its program especially since the interest rates that were forecasted were at 3.5% and now we face a cost of 5 % for the next 30 – 40 billion of financing needed this year.
The game the politician will try to play is obvious- they will try to blackmail the EU that if they do not take care of Greece the euro would collapse.( did you see all the civil servants running to get the loan for Greece? They are afraid to lose their jobs)
They should have done this on day ONE. QUIETLY. Now all is in the public domain. It is too late. I do not know for how long they can play this game. I do know that we can not afford 5% interest.
Tomorrow will be a day out of the movie the Twilight Zone. The markets will see the loan facility and Greek spreads will fall to about 180- 200 basis points… then by days end the market will compensate this downward swing by an uptick to put some pressure on the Greek government.
The real swing will come however when Fitch or Standard and Poor issue their opinion. No one believes at the end that the entire $400 billion is going to be guaranteed by the EU while the Greek Government says we are not asking for aid and avoiding applying the TERMS that the loan asks. This works only once.
So soon we will face again high spreads and at that point the Government will have to give in and then the wrath is going to be violent. They would have given false hopes – look at the talk shows tomorrow, we won, we put a gun on the table, no other measures required etc. False hopes however no society will tolerate or forgive when the truth comes out.
So tomorrow let us ask – What are the TERMS of the facility? I think the answer will be painful. And the dog will keep on starving.