Changing With The Times

I said previously that I would maintain a wiki and blog at the same time. That way with the wiki you get a good overall view of things, and the blog are thoughts from the moment.

Well…

That did not work out so well. My blog went downhill, and so did my wiki. I got nowhere!

Then I decided to look back and see what is going on. I realized something interesting, and it was blogging is not where its at anymore. Recently I joined a chat room and people asked me, “what’s my twitter id”. I gave them my id (christianhgross), but added I hardly twitter.

Recently a very good friend of mine came by to visit me. Josh works at Microsoft and his job is to keep in close contact to the community. What struck me as interesting was that he blogged a bit, but twittered more. So after I joined the chat room I thought, if Josh twitters maybe there is something to this.

Indeed there is…

Hence from this point on I have come to the hard decision that I will broadcast my twitters to my blog, and write my articles on my wiki.

As they say, adapt and survive, and I am adapting…

The Euro Schizophrenia Continues

At the beginning of May I said that the Greek demonstrations would drop off dramatically. Of course nobody listened… What has happened? Oh yeah the Greek demonstrations have dropped off dramatically.

So why did this happen? It is because the English speaking media does not understand mainland Europe. In fact the English speaking media is pretty ignorant of everything that is not English speaking.

Let me illustrate another misunderstanding. These folks are talking how the Euro dropping is bad, and that the European economies will do bad. YET, and here is the big YET… Oh this will be great to take a European vacation.

Don’t you get it? If you think on the one hand that the European mainland will collapse, but then travel there on vacation the economy will grow! In fact I hear it among all of the American’s. Oh great now we can vacation in Europe on the cheap. That means the Euro-zone economies will expand, while the strengthening currencies just keep loosing business. This is pure Schizophrenia!

Remember that mainland Europe does not care that much for financial engineering, and in a Swiss poll only one guy on the street said what was happening is a problem. Want to know why? Because he is a fund manager. The rest are just average people who really don’t care, or more aptly put they just want to make sure they make more money.

Having the Euro tank when Germany introduces stronger financial regulations only emboldens the people to stand behind the Euro. Take it from the perspective of somebody on the street. If they see stronger hedge fund regulations and stronger financial regulations resulting in the market tanking the person on the street is going to say, “good for the government”. It is populism in its purest form, but the hedgies are making themselves easy targets.

The hedgies are as stupid and greedy as ever. They think because they can push around the governments in America or Great Britain that they can do the same on mainland Europe. Sorry hedgies you are dumb! GIVE IT UP! The more you push the easier it will be to push through regulations against you. And the more, I as another market participant will have to suffer because of your lunacy!

What I wonder is how long the USA is going to watch this. After all with a strengthening dollar the US competitiveness has just gone out the window. How long before the US starts clamping down. After all, the populists fuse for the financial community has gotten mighty short.

Market Tanks On News Of German Bans On Naked Shorting?

Wow sell sell sell…  Why? Because Germany introduced a ban on naked short selling?

Germany will ban so-called naked short-selling from midnight, a lawmaker with the ruling Christian Democratic Union told Dow Jones Newswires. He added that Chancellor Angela Merkel will announce the plan in her speech to the lower house of parliament Wednesday morning.

Naked short selling—which differs from short selling in that the sold shares aren’t borrowed in advance—came under fire at the height of Greece’s struggle to refinance its debt, with many euro-zone governments saying such transactions in credit-default swaps, a type of default insurance, artificially inflated Greek funding costs.

Wow, Is naked short selling legal in the US?

Its not legal?

So Germany is introducing legislation on par with the US?

YEAH that’s REAL logical!!!

Or could it be something else? Could be that bears are trying to scare the market?

You decide… Logical or not?

Bild (Germany’s Tabloid) Asks Do We Need the Euro?

I find the article from one of Germany’s biggest tabloid very interesting. It asks does Germany need the Euro? Would Germany not rather have the Deutsch Mark back?

First in this time of crisis I find it interesting that Germans are split 50-50 about the Deutsch Mark. You would figure that more German’s would want the Deutsch Mark back. I guess I can tell you anybody over 50 wants the Deutsch Mark, and anybody below 50 doesn’t want the Deutsch Mark.

The answer in the article is that Germans don’t want the Deutsch Mark because it would completely fatal for the German economy. In the tabloid article it clearly states that if Germany backed out of the Euro and the EU Germany would crumble and collapse within days. The strength of Germany is its ability to produce and export. But if that ability becomes impaired by a very strong currency Germany becomes unaffordable. Made in Germany then becomes too expensive Made in Germany.

This is the paradox of Germany and its relationship to the Euro. Yes it is the anchor to the Euro, but Germany also needs the Euro to make it spend. It is an example of how opposites attract each other. So while Germans complain about the free spending Spanish, but it is those Spaniards that cater to the Germans and make them spend. Remember this, Mallocra and Spain is a play ground for the Germans.

Just think for the moment what Europe would be like if all of Europe would be German? And think of what Europe would be like if all of it were like Spain? When you have Spain and Germany in a union it is that paradox that keeps the union alive…

So why does the rest of the world not get this? Very simple, the media is controlled by the English media. The english media is dominated by two nations; USA, and UK. Both of these nations are busy doing financial engineering, while Germany and the rest of EU are busy building widgets.

This is why I want to see a weak USD! I want America to start building widgets! I know American’s can, but time and time again the focus is on financial engineering. While some financial engineering is beneficial building widgets is better for everybody.

Why the Agreement Between Turkey and Greece Means GDP Growth for the EU and Greece

Greece and Turkey have met and begun the process of building ties between their two countries. Let me tell you a bit about this situation since my father was living and working in Boursa Turkey.

Athens and Greece have been enemies for a very long time. This dates back 400 years or more, back to the Ottoman empire and beyond. The Ottoman empire was a Turkish empire. This hate of each other has caused many problems including Cyprus and the ownership of a few islands in the black sea.

But when Greece and Turkey met to thaw their relationship I said, wow, now that is impressive. Greece per capita has one of the highest military budgets in Europe, likewise with Turkey. This military budget is defend their countries against their enemy, whether it be Greece or Turkey.

Now things are changing and it is interesting how this change is coming. Will it work? I say it will because both Erdogan, and Papandreou have a vested interest. Erdogan is a Muslim fundamentalist, but he is also a realist. He knows Turkish people cannot live on words alone. He knows that for his party and his country to succeed they must attract trade. Think of Erdogan as a sort of leader like those in Dubai. Thus his main roadblock is Greece! And if Turkey needs to help Greece so be it! After all the turkish leader did come with an entourage of 300 business people. Think about that for the moment. 300 Turkish business people want in on trade with Greece. That says it all.

Papandreou on the other hand wants to rebuild Greece and he wants to save his country. He is willing to battle the unions (remember he is a left sided politician), willing to battle the nationalists (those who would never talk to Turkey) to save his country. He is the sort of politician that you don’t meet very often. One that truly wants to save his country.

With these two politicians you have the possibility of two countries building deeper trade ties, and probably with Turkey doing most of the heavy lifting. I actually think it will be Turkey that will “bail out” Greece, and not the EU.

Why would Turkey do this? Trade!

First consider the location of Turkey.

 europe-map[1]

Turkey is in the lower right. Let’s say that Turkey and Greece do indeed open trade routes it means that the EU can easily do trade with Syria, Lebanon, Israel, and Iraq. Of course you might say, “but hey can’t they do that already?” Well not really. Turkey is a pivot stone between East and West. Greece was blocking that pivot stone. But now with trade ties being established that pivot stone will become the grease for east west trade.

Take it from the perspective of the EU and Greece. All of those countries with several hundred million people will now be open trade. The EU can build/expand pipelines of gas and oil thus reducing their dependence on Russia. The EU can in turn sell their products to the East using Turkey as their middle entity.

Thus I think you can understand why Turkey will end up bailing out Greece and not the EU. If you want to get a further understanding of what I am thinking about listen to the following video. Skip ahead to around 10 minutes for the part that relates to my thinking.

In the end this is very very good news! And it means finally Greece has a way to grow its economy! Who would have thought that at the end it will come to Turkey bailing out the EU with the needed growth???

Funny…

Wow Greece Has Changed!

I know I am going to hear a lot about the naysayers…

BUT look at the following article, Greece and Turkey have called a truce. They have both agreed to a massive reduction in military budgets and increased trade between the two countries.

Die griechische Schuldenkrise ermöglicht eine historische Annäherung zwischen Athen und Ankara. Um die Staatskasse zu schonen, wollen die beiden Rivalen ihre Rüstungsausgaben massiv kürzen.

People pigs just flew! And to think people doubted that Greece could change! Congrats Greece you are making history. I am more optimistic than ever.

What Happened With The France Euro Rumour? I Think I Have The Answer!

I have no idea if I caused this, but it is interesting to think about. First let’s look at the article and you will see what happened.

He said an earlier rumor that France’s credit rating could be in jeopardy accelerated the selloff in the euro, as it added to the markets’ contagion fears.

"That scared the heck out of everybody," Cashin said.

When I heard this I thought, “you have got to be f****g kidding me?”

On Friday early in the morning CET time I was talking with some people in the stockguy22 chat forum about the Euro. We were having a rational discussion about the Euro zone and sovereign debt in general.

I then said, “you know this fear over Greek, Spanish, Italian, and Portuguese debt is completely overrated. I actually think that those country’s debt costs are overrated. Then I said, if you really wanted to find debt inconsistencies then look at France, the UK, and the USA. I said those three countries with their ratings were masking a true debt problem.” You only need to look at my debt picture from previous blog entries.

So I left the discussion as I thought it was just a discussion. Then later on in the day I start hearing about some other users who twittered that French debt is a potential next problem! I thought WTF? I said nothing in the forum since I was in disbelief. Then it dawned onto me, what was happening is a negative feedback loop.

I am thinking it was my comments because up to that point nobody said anything about France! Nothing, nada, zip, zilch zero! And on Friday morning I talked about France. Thus this probably was blogged, twittered and shared around.

Now comes the question what does this mean? It means once and for all that the Euro is in take down mode. SOMEBODY wants the Euro to fail! After all when the US did the exact same thing everything worked out for the best. Yet when the ECB and does these things it all fails? Why is that? As I have said before, when all answers have been depleted the only logical answer is what remains, and that is that the Euro is in taken down mode.

What surprises the heck out of me is that people are so easily fooled by rumours, and I feel sorry that Fitch had to come out and say that France was ok. So in the end do I think France is a problem? Absolutely, but I also think the UK, and the USA have problems. Do I think that these countries will go under? Absolutely NOT! These countries like Greece will emerge for the better.

Do I truly believe my statements? Absolutely! When I graduated from university in 1992 Ontario and Canada had one of the worst recessions in a very long time. Canada had lots of debt, no growth, no dynamics. It was very much a situation like Greece. Don’t believe me look at the stats and compare how bad Canada was compared to the rest of the world at the time. I remember in our graduating engineering class only 1/3 could get jobs. It was a very bad situation. But with the liberal government slashing budgets, Canada bounced back. Many might say, “oh Canada had commodities”. Sorry, but no commodities made a dent in the Canadian budget after 2000. Before that it was Canada doing the heavy work!

That’s why I truly believe Greece and all of the other countries can make it back. However, what I also see is that back then if people had pounded Canada into the ground like they are Greece or the Euro, Canada as a country would not have survived!

So that’s why I say people take a deep breath and think rationally!

Is the Euro Crisis Winding Down, and the British Pound Crisis Starting? I Say Maybe So!

When I get into something I can become single-minded. Take for example the following article.

Monday’s market euphoria across the world at the terms of the European Union/International Monetary Fund rescue package for the European bond market faded Tuesday as investors sold stocks and took profits on the euro. The worry for investors is whether governments in Greece and Portugal can live up to their end of the bargain and manage to significantly cut government spending in the face of bitter opposition from voters.

Ok again moving the goal posts, but hey what’s not to like on moving the goal posts right.

Michael Gallagher, director of research at IDEAglobal, said he believes the UK will be alright due to its ability to sell government bonds internally.

Steven Barrow, the head of G10 Research at Standard Bank agreed.

“I am confident about the prospects for the pound,” Barrow said. The difference between the UK and Greece, according to Barrow, is that Britain has more room for maneuver.

“The UK can devalue and print money, the UK will not default, the UK will not need the IMF,” he said.

Let’s see the Euro is devaluing, check. The Euro zone can sell its bonds internally, check. The Euro zone has just issued a huge fund. The Eurozone can print money, check. So if the Euro zone can do the same thing as the UK, tell me what’s the difference?

Even the UBS analyst is saying so.

Stephane Deo, the head of European economic research at UBS, is more upbeat on the impact of the rescue package.

"The plan is actually quite impressive," Deo said. "We only need €500 billion to guarantee borrowing for Spain and Portugal, we have €750 billion. The euro still needs to do its work of cutting deficits in countries like Greece, Portugal and Spain and have two years to do so.”

Even Roubini is convinced this could work. You know Dr Doom!

Roubini believes the sheer size of the rescue package will therefore halt the threat of contagion.

The amount, in addition to European Central Bank liquidity facilities and quantitative easing, "comfortably covers the worst case scenario and should thus help fight contagion," he wrote.

The aid package will also force euro zone countries to cut their budget deficits to avoid getting even more into debt, he said.

"In addition, the relatively high interest rates on joint loans should serve as an incentive for euro zone members to put their fiscal house in order without recurring to the facility," Roubini added.

Though what I found most interesting in all of this is that the UK is refusing to help the Euro zone.

There were signs of a backlash on Tuesday against Britain for refusing to take part in the eurozone’s €750bn rescue plan with a senior French policymaker suggesting Europe would think hard about coming to the UK’s help in a sterling crisis.

Poland and Sweden said they would contribute to the €440bn facility of eurozone government-backed loans. Britain refused, although it did give the go-ahead for a €60bn extension of the European Union’s existing balance-of-payments facility to members of the eurozone.

The UK in refusing to work alongside with the EU will come back to haunt them. Many in the EU are already saying, “what is the UK doing really?”

But do you know who I should applaud? The United States, through the IMF they will be helping in this fund. I say United States, thank-you! Good going!

According to the New York Times, Mr Obama was on the phone with the German chancellor on Friday "offering urgent advice" and "some not so subtle prodding" that Europe needed an overwhelming rescue package of the sort Washington came up with in 2008.

"He was trying to convey that he knew these were politically difficult steps that the leaders there had to take, that he had gone through them as well. And that, from his experience, trying to get out ahead as much as possible was the right way to go," one senior administration official familiar with the conversation told the US newspaper.

Am I Euro Biased? On the Markets Currency Hypocrisy

Today somebody in the chat forum tried to politely say I was biased towards the Euro and hence could not see with clarity. I would say, first I am contrarian and will rant about things.

But secondly and more importantly, I am trying to point out the hypocrisy.

First let’s start with the Greek crisis. The media was saying, the crisis will take down the Euro zone. I was one of them.

Greece’s debt crisis is the biggest credibility test the euro zone has faced since the single currency was created.

Neither measure makes economic sense. But failure to enforce the rules on Greece could harm the credibility of the euro zone.

The Eurozone with the IMF came up with a bailout package for Greece, and Greece introduced the austerity measures. So the problem is Greece and only Greece, right?

George Soros, the international financier, said at the weekend that he thought Greece would recover but cast doubt on the future of the euro. “The euro is being very severely tested because its construction is flawed. I think Greece will survive for various reasons, but it still leaves Spain and the other countries.”

Now is that not interesting Greece is getting solved and the market decides to change the location of the goal posts. They move it to Spain and Portugal. So then the Eurzone decides to tackle the overall Euro problem. And Germany even approves it.

The German government says it has approved the country’s contribution to the $1 trillion emergency rescue package to stabilize the euro currency.
A government official said Tuesday that Germany is expected to contribute at least $157 billion to the debt rescue measures.

So what does the market say?

The euro fell on Tuesday as the relief rally unleashed by an emergency aid package to prevent the spread of a euro zone debt crisis dissipated and the focus switched back to structural problems plaguing the bloc.

Ah so its not a Greek problem, not a German support problem, it is a “structural problem”. Is that not interesting, now let’s look at the structural problems of say the US and UK. Remember my graphic.

ScreenHunter_01May.0520.52_thumb[1]

Let’s look at the structural problems of Europe shall we. Interesting that the EU bloc has less structural problems than say the UK, and USA. Yet not a peep, whimper or comment on those places. Heck the UK and USA are triple A rated bond countries.

This is the hypocrisy of the market. So what is the cause of this? Very simple as in Sherlock Holmes said, when all of the answers have been eliminated only what remains is the answer no matter how ludicrous.

A February 8 dinner is sparking controversy because one of the nearly two dozen topics discussed during the program was how hedge funds could profit from a decline in the euro, one of the world’s most heavily traded currencies.

The dinner adds to the growing perception among the general public and some political leaders that many hedge funds prosper by making money off misery — whether it is betting on the decline of a stock, a bond, a currency or even a country’s debt.

If I may add one last point:

Der Chefökonom der Bremer Landesbank, Folker Hellmeyer, führte den erneuten Kursrückgang des Euro auch auf das Wirken von Spekulanten zurück, «die nicht bereit sind, kampflos das Feld zu räumen». Er gab allerdings zu bedenken, die Euro-Zone gehe das Thema Staatsverschuldung als einzige Region aggressiv an und bemühe sich um eine nachhaltige Lösung.

He is saying the speculators are still at work, but what needs to be considered is that the EU zone is the only block that is aggressively considering how to manage its debt.

The German Election Was Not A Euro Referendum

The media is going to say that the CDU lost because of Greece, the bail out and the airwaves are going to go on, and on, and on about this. But you need to look at the facts much closer.

First look at the winners and losers:

ScreenHunter_01 May. 09 22.09

Look at the results. The CDU, and SPD are the big losers. Also remember that the SPD are a 50 year low. Thus the discussion between the CDU, and SPD is completely beside the point.

Here is what has happened to the SPD throughout the years.

ScreenHunter_05 May. 09 22.54

In fact in the show Anne Will the political analyst (did not catch his name) he said when you have 60% of the people not going to vote you do not have symbolic. You can’t read a rejection of the Greek support because otherwise people would have gone in droves to vote.

ScreenHunter_04 May. 09 22.18

When you look closer at what did motivate people you see that other issues are at the forefront.

ScreenHunter_01 May. 09 20.07

The most important issue is education. Greece as a 50-50 split on importance. Thus it is interesting, but not that interesting. As the political analyst said the important issues were the local issues and on that the CDU, and FDP parties did a poor job.

What you should look at are the Greens and how much they gained. Thus the question is, are the Greens for or against the support for the Euro and Greece?

ScreenHunter_03 May. 09 22.23

The Greens supported the government, even though the SPD did not vote for the package. Simply put Germans were NOT AGAINST the Greek support. What Germans want and this election showed it, they want some social justice! They want the banks regulated, they want speculation controlled, and they want the finance industry to develop some morals. This is the Green position…

So anybody trying to say anything else is missing the point…