Of Peace, Paradox and Pittance

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What a week on Wall Street, and at Feidiou 14 as well! President Obama's paradoxical acceptance of the Nobel Peace Prize, while escalating his war in Afghanistan and preparing for another in Iran, presented an interesting nuance to a busy period. In Copenhagen, global powers traded ideas, presented offers and initiated some significant efforts toward changing our world. Finally, for Greeks, especially those invested in the shares of Greek stocks traded either in New York or on the Athens Stock Exchange (ASE), it was a hell of a rough week to endure.

Beginning with the President: Barrack Obama collected the Nobel Peace Prize in a manner generally construed as humble. However, the admirable leader included an appealing (or was it appeasing) note for Republicans, reminding the world that the USA had underwritten Europe's and the world's tranquility during its recent reign as global kingpin. The ambitious President reminded skeptics that he leads a nation that approaches the world realistically, including the many serious threats against it. He noted that oftentimes, this requires the American leader to sound the horn of war for the purpose of a greater peace. And so, he was able to accept his peace prize with a straight face.

An ambitious, though often cynically construed as fruitless, gathering of nations in Copenhagen sought to come to meaningful agreement on greenhouse gas emission standards in order to reverse the destructive haze of global warming. After being played down by the US Press Secretary, who suggested meaningful accord was unlikely this month, several surprising developments offered new hope for the hapless.

Not least of the good cheer spreaders, the United States Environmental Protection Agency (EPA) issued an "Endangerment Finding," declaring that six greenhouse gases, including carbon dioxide and methane, pose a danger to the environment and public health. Theoretically, this ruling would allow the US Federal Government to regulate gas emissions without the passing of a new law. Rather, the EPA's authority would be granted under the Clean Air Act. We say "theoretically" because we expect this economically significant decision to draw more than a few complaints, not to mention lawsuits.

The European Union also offered a note of hope to start off the conference in Copenhagen. The EU said it would up its 20% carbon gas emission reduction plan for 2020 to 30% if it found equal commitments from global industrial leaders.

Finally, a figurative earthquake rocked Athens this week when two power wielding credit rating agencies warned and downgraded Greece's credit rating. First Standard & Poor's placed the nation on "negative credit watch" Monday. Then on Tuesday, Fitch took it a step further by cutting Greece’s debt rating a notch, to BBB+, from A-. Specifically, S&P analyst Marko Mrsnik said, "The ratings on Greece have been placed on CreditWatch negative to reflect our view that the fiscal consolidation plans outlined by the new government are unlikely to secure a sustained reduction in fiscal deficits and the public debt burden."

The result of all this damaging power wielding from Water Street was a Greek economy and stock market in turmoil. The Athens Stock Exchange General Index shed 9.4% of its value as rumors spread about Greece's potential to default on its debt. Risk spreads widened and prices fell for Greece's government debt as it suddenly lost its appeal. If left uncured, the credit problem would make it difficult for Greece's new government to raise the capital it needs to fund planned initiatives it outlined through its campaign. This sent Prime Minister Papandreou scrambling to prepare a plan for Monday statement. Hopes are that his effort and a months ago statement from Berlin, which stated members of the EU would be bailed out before defaulting on their debt, might settle investor concern.


Editor's Note: Article may interest investors in National Bank of Greece (NYSE: NBG), Alpha Bank (ASE: ALPHA), Aspis Bank (ASE: ASPT), Attica Bank (ASE: TATT), Bank of Greece (ASE: TELL), General Bank of Greece (ASE: TGEN), Marfin Laiki Bank (ASE: MARFB), Pireaus Bank (ASE: PPA), Proton Bank (ASE: PRO), Hellenic Telecommunications (NYSE: OTE), Coca-Cola Hellenic Bottling (NYSE: CCH), Danaos (NYSE: DAC), Tsakos Energy Navigation (NYSE: TNP), Top Ships (Nasdaq: TOPS), Paragon Shipping (Nasdaq: PRGN), DryShips (Nasdaq: DRYS) and Genco Shipping (NYSE: GNK).

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