Debt, debt and more debt

That’s what is hurting world equity markets lately.

The Greeks are like Bondy, Skasey and Johnny Spalvins collectively, but on steroids.

They are in a position now where if they got a margin call, and were liquidated they’d be worth five cents in the dollar.

That’s way worse than our corporate cowboys from the 1980’s.

They would still be in business if their banks were as sympathetic as the European Central Bank.

The markets are jumping at shadows with regards to debt problems in Europe, and any rumour or innuendo is being treated as gospel before it is confirmed or denied.

Greece is the basket case, but the French and Germans are exposed through their banking system.

However, there is a ray of light. That light would come from the east, and it is the emerging giant that is China.

Oh, and there is also the prospect of money printing.

The Chinese are intimating that they are concerned by European debt.

They are no orphan.  The trouble for the Eurozone is if the Chinese are willing to buy European debt, they will want their pound of flesh.


Basically, Santorini, Mykonos and the Acropolis will end up having names in Mandarin.

And you won’t be able to get a souvlaki after a big night out; you’ll have to be happy with a takeaway Peking Duck.
Apparently, “the Greek situation could be coming to a head” according to Khiem Do, the Hong Kong based head of multi-asset strategy at BaringAsset Management, which oversees around $10 billion.

“Some hair cut might be needed for Greece if they don’t receive additional funding.

“That could create a domino effect in countries like Spain, Italy and Portugal.

“That’s what the market is fearing.”

Bill Blain, co-head of the Special Situations Group at Newedge Group, discusses the consequences of Greek default.

He argues that the markets would rally initially on any default.

I tend to agree, as the place is technically bankrupt.

Debt is like Medusa. You don’t want to be attracted to it, but you find you just can’t stop being seduced by it.

That, and not paying taxes like us poor little Aussie battlers do every quarter.

In Greece, tax evasion is a national pastime, and the Greek nationals expect the government to fully help the locals out in retirement.

Sadly, you can’t have your cake and eat it too.


Peter Hayes