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Greek PM freezes privatizations; a course had been laid..... yes, we still live in interesting times
'Course, you'll be the judge of any consequences, eh? And what is that other sucking sound today? Like an equity market vacuum..... 'cept'in the investment grade bonds. Caused me to scratch my head more than once today. 1.7% on the 10 year and 2.3% on the 30 year. Probably just a short term blip....... VDE at -4% near the close.
I'm going to look around for some good equity news, okay ???
"someone has to pay for the Greek government retirees to collect at this age."
Not dissenting from your views on this, but we do need to look at the entire picture in context. Like many other countries, especially in the mid-east, Greece is pumping out graduates and young folks into a non-existent job market. There simply is not any realistic employment opportunity there. The luckier young ones are migrating to other pastures.
The reality is that Greece will never be able to absorb the potential young workforce through the traditional but now non-existent path of expanding industrial production. This problem is not going away, it is going to gradually increase not only in countries like Greece, but eventually in the developed Western "rich" countries as well, including the US. New employment types, "Uber" for example, will help to absorb a small portion of the surplus workers, but you can't run an entire economy by having everyone driving each other around. This is a macroeconomic development which will, in future history, be regarded as disruptive to society and nations as the industrial revolution.
Yes, Greece has completely spent themselves into oblivion. But if you've been there, you know that those people are NOT wealthy slackers all looking to live off a handout from other nations. They, as a people, through their government, simply kept borrowing against the very dim possibility that somehow "things would be better" in the future, and that somehow this would all work out.
It's easy to place all the blame on that, but let's not forget that there were lenders who cynically kept the money supply flowing because of good interest rates. In essence, Greece is simply the 2008 US financial/lending/housing debacle writ large. Just another version of payday lending at exorbitant rates, hoping to make some money off of people who will NEVER be able to pay off their debt, but if the lender is lucky, he'll get his before the whole thing sinks.
Let's just keep loaning outfits like Greece cash, to be used of course to pay back the never-ending installment loans, with the totally predictable result of eventual bankruptcy after the Greeks have been drained of every last item of value. What would YOU do if YOU were a Greek?
The problem, the real problem in Europe right now is that the Germans were right before (tough requirements when they bailed out Greece in the first place) and they're wrong now (not only Greece but others need to spend to get their economies going). Precedents are dangerous anywhere in the world but especially so in Europe. The demographics have been bad for years and its not getting better, anywhere. The first of the real problems has happened, but it won't be the last and that's why Draghi talks about the need for real reform rather than just pumping money into the economy. It will get worse before it gets better.
OJ et alia, Krugman has a few interesting posts on this recently, some counterintuitive, some not, all fascinating if you're in a wonkish mood; just google krugman blog and you probably can get to them unpaywalled.
Catch said: "Investment grade bonds. Caused me to scratch my head more than once today. 1.7% on the 10 year and 2.3% on the 30 year. Probably just a short term blip....... "
Don't scratch your head too hard Catch. Art Cashin in Ted's link is suggesting the 10 year may fall to 1.5% soon.
I'm at a loss to explain anything right now. Very bizarre action in all the markets. Makes little sense to me any more. Especially in light of the improving U.S. economy and continued hints from the Fed they're preparing to raise rates.
Well, you know that our house has been a bond house for longer than I had expected; and surely much longer than others would expect.
We rode the emerging markets and high yield bonds. Those are all gone now, excepting whatever small pieces may be inside of a total bond fund. Our largest long time bond fund holding of LSBDX was sold in early January. We have continued though, to hold investment grade at the corp. level as well as gov't. issues (no short term stuff <5 years). 'Course, continuing to hold bonds is part of a moderate allocation, so this part is understandable; at least for our risk/reward scenario. We remain (at least as of today) with our highest equity allocation, in several years; for the past 18 months at about 45%. The equity mix is 95% U.S. centered among mostly large cap with a sprinkles of mid and small caps in broadbased blended funds, also with specific equity holdings in healthcare and and U.S. real estate funds.
Past smiling on a day like today when the investment grade bonds pull their weigh; I really don't like the feeling of why bond yields are so low. I don't like the indicated signs and meanings.
All of this may end on a fairly smooth note for overall investments; but I am sure one may need to be very patient. Perhaps 10 years of patience. For now till then may have some very stinky periods. Not a forecast, just my intuition.
Lastly, we continue to watch energy very closely; for a buy point. And the ALGO machines and their programmers mixing with the other human folks must be having fun, too.
Take care and stay warm in the cold north country. Catch
Comments
Mr. Obama and Mr. Putin have one thing in common with the election, the congrats thing.
Not dissenting from your views on this, but we do need to look at the entire picture in context. Like many other countries, especially in the mid-east, Greece is pumping out graduates and young folks into a non-existent job market. There simply is not any realistic employment opportunity there. The luckier young ones are migrating to other pastures.
The reality is that Greece will never be able to absorb the potential young workforce through the traditional but now non-existent path of expanding industrial production. This problem is not going away, it is going to gradually increase not only in countries like Greece, but eventually in the developed Western "rich" countries as well, including the US. New employment types, "Uber" for example, will help to absorb a small portion of the surplus workers, but you can't run an entire economy by having everyone driving each other around. This is a macroeconomic development which will, in future history, be regarded as disruptive to society and nations as the industrial revolution.
Yes, Greece has completely spent themselves into oblivion. But if you've been there, you know that those people are NOT wealthy slackers all looking to live off a handout from other nations. They, as a people, through their government, simply kept borrowing against the very dim possibility that somehow "things would be better" in the future, and that somehow this would all work out.
It's easy to place all the blame on that, but let's not forget that there were lenders who cynically kept the money supply flowing because of good interest rates. In essence, Greece is simply the 2008 US financial/lending/housing debacle writ large. Just another version of payday lending at exorbitant rates, hoping to make some money off of people who will NEVER be able to pay off their debt, but if the lender is lucky, he'll get his before the whole thing sinks.
Let's just keep loaning outfits like Greece cash, to be used of course to pay back the never-ending installment loans, with the totally predictable result of eventual bankruptcy after the Greeks have been drained of every last item of value. What would YOU do if YOU were a Greek?
Caused me to scratch my head more than once today.
1.7% on the 10 year and 2.3% on the 30 year. Probably just a short term blip....... "
Don't scratch your head too hard Catch. Art Cashin in Ted's link is suggesting the 10 year may fall to 1.5% soon.
I'm at a loss to explain anything right now. Very bizarre action in all the markets. Makes little sense to me any more. Especially in light of the improving U.S. economy and continued hints from the Fed they're preparing to raise rates.
Well, you know that our house has been a bond house for longer than I had expected; and surely much longer than others would expect.
We rode the emerging markets and high yield bonds. Those are all gone now, excepting whatever small pieces may be inside of a total bond fund. Our largest long time bond fund holding of LSBDX was sold in early January. We have continued though, to hold investment grade at the corp. level as well as gov't. issues (no short term stuff <5 years).
'Course, continuing to hold bonds is part of a moderate allocation, so this part is understandable; at least for our risk/reward scenario.
We remain (at least as of today) with our highest equity allocation, in several years; for the past 18 months at about 45%. The equity mix is 95% U.S. centered among mostly large cap with a sprinkles of mid and small caps in broadbased blended funds, also with specific equity holdings in healthcare and and U.S. real estate funds.
Past smiling on a day like today when the investment grade bonds pull their weigh; I really don't like the feeling of why bond yields are so low. I don't like the indicated signs and meanings.
All of this may end on a fairly smooth note for overall investments; but I am sure one may need to be very patient. Perhaps 10 years of patience. For now till then may have some very stinky periods. Not a forecast, just my intuition.
Lastly, we continue to watch energy very closely; for a buy point. And the ALGO machines and their programmers mixing with the other human folks must be having fun, too.
Take care and stay warm in the cold north country.
Catch