Thursday

Will Greece Fall

Post a Comment March 11, 2010 – 11:58 am |   | Permalink |  Print This Post |

Headlines yesterday has the ex EU chief saying Greece crisis is over. Other EU leaders are also putting the blame on banks with credit default swaps. They are setting the crime scene - pointing fingers at hedge funds. If and when Greece fails, the blame would be on hedgefunds/banks even though they had nothing to do with it. The fact is lending money to Greece is bad business. That’s why no bank wants to do it. That’s why its neighbours have not stepped in. Indirectly, if everyone had credit default swaps on Greece’s failure, then everyone has more to gain if Greece dies than if it survives. Hence no one would want to bail Greece out. So the threat of credit default swaps is indirect. If Greece was sound and lending money to it was good business, someone would step in and even with trillions of dollars of CDS outstanding it would not make any difference to Greece.

That is why there is now talk about Euro 1 and Euro 2. The strong countries would be better off letting the weaker ones die. This can be achieved either by forming their own Euro currency or kicking the weak ones out (but the problem with the latter is there are quite a few European countries in trouble). This is probably why Jim Rogers said that the Euro is a “flawed currency”.

Anyway, thats our 2c. Call it conspiracy theory. The more headlines say Greece crisis is over and the more markets rally because of it, the more we will short the market.

We will close half our short R2K from last night at 677. $50 at 672 = $350.

Stops set for 677 for other $50/pt short.

We have ALOT of short NIFTY, so the right thing to do is to lighten up our profitable short positions to buffer our losing ones.