Greek Food for Thought

By The Greek:

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Panic has taken hold of the market and "The Greek" is looking for opportunity.

(Article interests NYSE: NYX, AMEX: SPY, AMEX: DIA, Nasdaq: QQQQ, AMEX: DOG, AMEX: SDS, AMEX: QLD)

Greek Food for Thought

Fear has taken strong grip of markets over the past few days as the entire financial world appears to be coming apart. However, there are several positive factors resulting from government actions that are lost in the mayhem, and we'll outline another later today. Yesterday, we noted the SEC's expansion of naked short selling restrictions and apparent will to enforce it.

Today's headlines are symptomatic of dire days. We suggest keeping a calm head and remembering that media outlets want your attention and so they dream up sensational headlines. We should note here that many bloggers do as well.

Morgan Stanley Fully Flustered

Morgan Stanley (NYSE: MS) appears fully flustered as its stock sinks dramatically on a daily basis; stock market sharks are selling it off like today's pariah, since easier to reach fruit has already been done in. It makes you wonder if the market could do in a truly solid company on rumor alone.

CNBC reported this morning that Morgan is aggressively seeking a merger partner. Specifically mentioned as potential allies, Citigroup (NYSE: C), Wachovia (NYSE: WB) and the Communist Republic of China. There's a noticeable decrease in anti-China spat coming out of the Democratically controlled Congress these days, since it seems the Chinese and Koreans come up regularly as potential saviors of American companies. We've noticed, however, that there's been little appetite for such consumption, just a lot of interest. Despite actually following through by taking a minor interest in Morgan Stanley, for the most part, there's been a lot of talk accompanied by little investment. Seems the Chinese are learning much about the inner workings of the American financial system as they invite CEOs of Bear Stearns (NYSE: JPM), Merrill Lynch (NYSE: MER), Lehman Brothers (NYSE: LEH, NYSE: BCS) to come and talk about deals that they hardly ever follow through with.

Global Central Banks Act in Union

The Central Banks of the world, the Federal Reserve, Bank of Canada, Bank of England, European Central Bank, Bank of Japan and the Swiss National Bank announced at the suspect hour of 3:00 a.m. that they would add liquidity to financial markets as needed. The FOMC offered a $180 billion expansion of SWAP lines with the banks. Since this always happens, you might wonder why it's also always effective in soothing markets back into control. It's a matter of balancing really, offering capital to grease the paths of sales, easing panic that those paths might not always be open. Being able to breath seems to act as a psychological massage for those fearful of asphyxiation.

Israel, a Step Closer to Female Leadership

Even though my political prediction savvy has been in question since my failings regarding Mitt Romney, who by the way I suspect might still become president some day; this lady in Israel, Tzipi Livni, struck me as a well-composed woman capable of winning her nation's confidence from first glance. I expect she will be Israel's next leader. What's this mean for Israel? Well, she's no softy, that's for sure. She's an ex-Mossad member from a tough family background, and I don't mean a broken family, I mean a tough Papa. So, while her feminine facade might prove extremely useful in negotiations with easily seduced counterparts, she's got a lion's heart to deal surprising punishment if necessary. Whether she's the best choice will be understood later, but she seems well-engineered for running her nation.

Russia Shutters its Markets

Without a doubt, authorities in Europe and the U.S., not to mention Georgia, are thoroughly enjoying the market mayhem occurring now in Russia. The dastardly duo of Putin and Medvedev are learning the hard way about the geopolitical factor, and the role it plays in financial stability. In the past, Russia has so effectively wielded the energy weapon against foes, and has aggressively positioned itself as a key energy channel for Europe ahead of pending Western conflict with Iran. But, investment capital now views Russian investment as dangerous as its leadership, and you can't contain capital with tanks.

So, Russia will bleed rubles until it figures this out, but we suspect it will engage in more unconventional methods of capital preservation, versus the conventional means it announced today. Medvedev is cutting oil taxes, though still keeping rich capitalists imprisoned, and flooding his markets with liquidity a' la Fed observed tactics. Russian markets are shuttered until Friday, but my bet is they stay closed through the weekend as the government tries to get a grip; it's likely also hopeful investors might forget about August over a quiet September weekend.

Jobless Claims Climb

Weekly initial jobless claims rose 10K this past week, to 455K. Recall, your favorite Greek says news of Lehman's demise and AIG's (NYSE: AIG) asset sales, pending merger of Morgan Stanley, potential failings of banks like Washington Mutual (NYSE: WM) and government cost cutting at Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) should lead to increased unemployment. I know, I know, "government cost cutting" is an oxymoron! What's not moronic, however, is our expectation that retail trade will shed mucho jobs over the dead zone ahead of Thanksgiving.

Stay tuned for more Greek grumblings, and please see our disclosure at the Wall Street Greek website.