Tuesday, June 19, 2012

Greece election: The next 3-months =====By Shan Saeed

My prediction after Greece Election: New Democracy (ND) and PASOK (P) will form a new government. Of significance is that another socialist party, The Democratic Left (DL), will join in with ND & P. This makes the coalition more credible as Fotis Kourelis runs DL. Fotis is well liked and respected in Greece. Syriza and the Communist parties will form the opposition. I have no idea what the far right parties will do. For a time, maybe. The DL party is in favor of rewriting the deal reached with Germany. I think that talk of this will happen in the coming days. It's not possible to be pleased with anything that happens in Greece these days. People are moving out of Greece and going to London for a few months. Everyone will go the Olympics and try not to think about life in Athens. I fear that social unrest is going to spring up again. This is the real reason, I see lot of blood in the global financial markets esp in Europe.

Greece is flat broke. In a few weeks the government will not be able to pay workers. When this happens, the strikes will resume. So what are the chances of another bailout package from Brussels? Brussels is not the decision maker for Greece bail out. The decision on more aid for Greece comes from Berlin. I think the Germans will say, “No.” So Greece will be forced out of the Euro? I think, Yes, this is a possibility. Greece is not competitive at all. It is 40% less competitive than even Spain. So ultimately some form of devaluation must happen.

Timing of Grexit? Where will the money come from that Greece needs to stay alive? I tell you again that it must come from Germany. We may hear that Germany is willing to renegotiate parts of the bailout, but significant new money from Germany is not in the cards. There will be another crisis in less than three-months. You bet. 

Disclaimer: This is just my research piece and not an investment idea. 

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