2. • I hate to keep coming back to Greece, but it’s turning out to be a major Greek
tragedy over there. The country cannot pay back its initial $130 billion or so
emergency bailout and now needs another $150 billion to pay back loans and
avoid a sovereign debt default. The reality is that Greece is tanking and falling
into shambles, waiting for a white knight to appear and clean up the financial
crisis. The country needs to follow strict austerity measures.
• I recall being in Greece in 1995 and wondering why there were so many
buildings in the construction phase sitting idly with no progress. The taxi driver
told me that, in Greece, all construction halts if interest rates are high, waiting
for rates to decline before continuing.
• Greece is a beautiful country full of history, and one that’s significant in the
development of mathematics and the arts. Yet now there appears to be a Greek
tragedy in the works.
•
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3. • American-born Greek Prime Minister George Papandreou then shocks the
global markets earlier this week after announcing that the country will need to
hold a national referendum to determine if its citizens want to accept the new
debt crisis bailout terms from the European Union. Papandreou is clearly trying
to save his own hide.
• Perhaps he should come back stateside and run for President?
• Again, I’m talking of survival here for Greece. What is there to talk about? As I
said the other day; imagine being on the brink of losing everything, but
someone says, “Don’t worry; I have money for your debt crisis, even if you may
not be able to pay it back.” Would you say no?
• The European Union obviously is fed up with Greece and wants a resolution to
the debt crisis. The European Union has demanded that Greece must accept
the austerity measures plan in order to receive funds; otherwise, it may need
to leave the European Union and go it alone. Of course, if this happens, Greece
would go into default, which could lead to a financial crisis throughout the
eurozone and cause havoc.
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4. • Opposition parties in Greece are calling for Greek Prime Minister George Papandreou to
resign and for a coalition government to accept the European Union deal. Germany and
France have indicated that they are tired of the Greek stalling and want the deal done
now.
• In my view, it’s silly that Greece believes it has any other options left and is risking a
catastrophic debt crisis and default. The debt crisis is not limited to Greece. Italy is also
struggling with its own massive debt crisis and austerity measures, while Portugal wants
more flexibility in the terms of its debt bailout. The demands, it seems, will not halt and
Europe likely has more problems waiting down the road.
• My feeling is that the risk continues to be high, as you can read about in Stocks Facing
Many Hurdles Ahead.
• Longer-term I continue to favor small-cap stocks. You can read why in Small-caps in a Bear
Market, But Have a Long-term View.
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