By Markos N. Kaminis
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Despite all of the vitriol emanating from the German side toward the Greeks and from the new Greek leadership about the former agreements of the predecessor government and the troika, I’m confident a favorable resolution is highly probable between Greece and its lenders
. So do not hang on every sensationalized suggestion of reporters blindly reading cue cards prepared for them quickly by writers more concerned about getting all their content tied up before the show airs. Pay attention to the actual situation and the realities of it, and see beyond the poignant language used by those negotiating and those reporting it.
Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.
Each morning we hear business television blatantly reporting things like “Germany rejected Greece’s offer,” or Greece did something negative. It’s all part of that sensationalism many media seem to get wrapped up in that causes them to not stop and take a moment to think. Or maybe they are simply reading the cue cards presented to them by the producers, who also give little time to any one topic for the sake of keeping the machine rolling.
Whatever it is, I’m tired of it, because it drives the losses of significant capital. Real money is on the table, though none of it from the reporters’ or producers’ perspective, as they are not allowed to own stock; the same often goes for analysts. But many of you are making panicked financial decisions based on some random person’s hurried words while on air from Athens, a place they neither understand nor care to know intimately since they only just arrived and are leaving in two days en route to the next catastrophic development to feed America’s television addiction.
When Greece was new to desperation and first in need of lifesaving capital from the troika, it signed onto about every prideful demand of every organization that believed itself entitled to demand whatever it liked of its desperate debtor. Those old faces of Greece did so not to dupe the Greek people for the sake of their own prosperity, but to survive, because it was the only option that did not involve severe disruption of the Greek economy and standard of living, or so they thought
. What we learned was that there was no such option for Greece really, and a lot of that was due to Standard & Poor’s curiously timed downgrade of Greece, which just so happened to preserve the dollar and U.S. interest rates when all looked lost for America. I may discuss this issue in another forum or media at a later date.
After the loss of lives of many good Greeks on the abrupt changes thrust upon them, driving unemployment, bankruptcy, homelessness and suicide, new voices arose that noticed this bailout thing might not have been optimal. Recently, I heard the new finance minister said something about a cow and how whipping it will not make a poor milk producer do better. It reminded me of my own desperate pleas made a few years ago to whoever would read me about the bad idea Europe had for Greece regarding abrupt and disruptive austerity. Why should the Germans be surprised that Greeks would vote in a new government once their eyes were opened? It’s because the Germans haven’t missed a meal, or seen a cousin jump off a bridge, or lost their jobs, savings and homes. German dignity is intact; it’s blind, insensitive and intolerant, but intact.
Fortunately for Greece, there are other nations also involved in making decisions in Europe, and some of them have likewise felt the pain Greece has suffered. And fortunately for Greece, the Europeans will fear the unknown consequences of a Grexit more than giving Greece some room to breathe, and will make concessions to preserve stability. There’s too much risk for Europe to endure from what might happen, and it does not have the stomach for another tumultuous time. The same goes for Greeks, who despite enduring great pains from austerity, fear more what might happen if Greece were ousted from the euro-zone. Some Greeks have started to see improvement and do not want to return to the days of burning streets and disrupted lives.
There are some real worries though. For instance, worry about Alexis Tsipras’ press for a Parliamentary vote on austerity and basically euro-zone participation, which is a real concern considering his party’s new power. This should be a referendum issue and not one decided while Greece tempts Europe, because this government is too new and the people have expressed strong preference to remain in the euro-zone. And also worry about European hard-liners, who treat Greece more like a drug addicted stranger than an old wise brother who has gone through some tough times lately. Worry about people who want to make critical decisions on a short timeline and ahead of deadlines and drop dead dates.
In conclusion, the human condition and the patterns of people should lead to a surprising amicable solution, because in the end, nobody wants to usher in uncertainty and potential chaos. That is doubled for a region that is just coming through such a period. European hard-liners without personal attachments to issues will find it easy to back off seemingly solid demands and let softer voices balance the way. New Greek leaders, who spoke boldly before gaining power, will find power comes with great responsibility. Fear of failing the Greek people will cause those leaders to tread carefully lest they make an epic mistake. Change is something best tested and tasted before diving into, and fear of making a great mistake should lead Greece and its euro-zone partners to some compromise.
DISCLOSURE: Kaminis is long National Bank of Greece (NYSE: NBG), Global X FTSE Greece 20 (NYSE: GREK) and Bank of America (NYSE: BAC) and short the PowerShares US Dollar Bullish (NYSE: UUP), iPath S&P 500 VIX (NYSE: VXX) on the thesis of a Greece euro-zone resolution. Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.
Labels: Europe, Europe-2015, Greece, Greece-2015, Market-Outlook, Market-Outlook-2015-Q1