Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
Gold Price Closely Tracks Debt-to-GDP Ratio - 9th Apr 20
Gold, Silver and Rigged Market Socialism - 9th Apr 20
Going to School in Lockdown Britain, Dobcroft Sheffield - 9th Apr 20
Amazon Face Masks to Protect Against Covid-19 Viral Particles N95, FPP2, PM2.5, for Kids and Adults - 9th Apr 20
Is Natural Gas Price Ready For An April Rally? - 8th Apr 20
Market Predictions And The Business Implications - 8th Apr 20
When Will UK Coronavirus Crisis Imrpove - Infections and Deaths Trend Trajectory Analysis - 8th Apr 20
BBC Newsnight Focuses on Tory Leadership Whilst Boris Johnson Fights for his Life! - 8th Apr 20
The Big Short Guides us to What is Next for the Stock Market - 8th Apr 20
USD Index Sheds Light on the Upcoming Gold Move - 8th Apr 20
The Post CoronaVirus New Normal - 8th Apr 20
US Coronavirus Trend Trajectory Forecast Current State - 7th Apr 20
Boris Johnson Fighting for his Life In Intensive Care - UK Coronavirus Crisis - 7th Apr 20
Precious Metals Are About To Reset Like In 2008 – Gold Bugs, Buckle Up! - 7th Apr 20
Crude Oil's 2020 Crash: See What Helped (Some) Traders Pivot Just in Time - 7th Apr 20
Was the Fed Just Nationalized? - 7th Apr 20
Gold & Silver Mines Closed as Physical Silver Becomes “Most Undervalued Asset” - 7th Apr 20
US Coronavirus Blacktop Politics - 7th Apr 20
Coronavirus is America's "Pearl Harbour" Moment, There Will be a Reckoning With China - 6th Apr 20
Coronavirus Crisis Exposes Consequences of Fed Policy: Americans Have No Savings - 6th Apr 20
The Stock Market Is Not a Magic Money Machine - 6th Apr 20
Gold Stocks Crash, V-Bounce! - 6th Apr 20
How Can Writing Business Essay Help You In Business Analytics Skills - 6th Apr 20
PAYPAL WARNING - Your Stimulus Funds Are at Risk of Being Frozen for 6 Months! - 5th Apr 20
Stocks Hanging By the Fingernails? - 5th Apr 20
US Federal Budget Deficits: To $30 Trillion and Beyond - 5th Apr 20
The Lucrative Profitability Of A Move To Negative Interest Rates - Pandemic Edition - 5th Apr 20
Visa Denials: How to avoid it and what to do if your Visa is denied? - 5th Apr 20 - Uday Tank
WARNING PAYPAL Making a Grab for US $1200 Stimulus Payments - 4th Apr 20
US COVID-19 Death Toll Higher Than China’s Now. Will Gold Rally? - 4th Apr 20
Concerned That Asia Could Blow A Hole In Future Economic Recovery - 4th Apr 20
Bracing for Europe’s Coronavirus Contractionand Debt Crisis - 4th Apr 20
Stocks: When Grass Looks Greener on the Other Side of the ... Pond - 3rd Apr 20
How the C-Factor Could Decimate 2020 Global Gold and Silver Production - 3rd Apr 20
US Between Scylla and Charybdis Covid-19 - 3rd Apr 20
Covid19 What's Your Risk of Death Analysis by Age, Gender, Comorbidities and BMI - 3rd Apr 20
US Coronavirus Infections & Deaths Trend Trajectory - How Bad Will it Get? - 2nd Apr 20
Silver Looks Bearish Short to Medium Term - 2nd Apr 20
Mickey Fulp: 'Never Let a Good Crisis Go to Waste' - 2nd Apr 20
Stock Market Selloff Structure Explained – Fibonacci On Deck - 2nd Apr 20
COVID-19 FINANCIAL LOCKDOWN: Can PAYPAL Be Trusted to Handle US $1200 Stimulus Payments? - 2nd Apr 20
Day in the Life of Coronavirus LOCKDOWN - Sheffield, UK - 2nd Apr 20
UK Coronavirus Infections and Deaths Trend Trajectory - Deviation Against Forecast - 1st Apr 20
Huge Unemployment Is Coming. Will It Push Gold Prices Up? - 1st Apr 20
Gold Powerful 2008 Lessons That Apply Today - 1st Apr 20
US Coronavirus Infections and Deaths Projections Trend Forecast - Video - 1st Apr 20
From Global Virus Acceleration to Global Debt Explosion - 1st Apr 20
UK Supermarkets Coronavirus Panic Buying Before Lock Down - Tesco Empty Shelves - 1st Apr 20
Gold From a Failed Breakout to a Failed Breakdown - 1st Apr 20
P FOR PANDEMIC - 1st Apr 20
The Past Stock Market Week Was More Important Than You May Understand - 31st Mar 20
Coronavirus - No, You Do Not Hear the Fat Lady Warming Up - 31st Mar 20
Life, Religions, Business, Globalization & Information Technology In The Post-Corona Pandemics Age - 31st Mar 20
Three Charts Every Stock Market Trader and Investor Must See - 31st Mar 20
Coronavirus Stocks Bear Market Trend Forecast - Video - 31st Mar 20
Coronavirus Dow Stocks Bear Market Into End April 2020 Trend Forecast - 31st Mar 20
Is it better to have a loan or credit card debt when applying for a mortgage? - 31st Mar 20

Market Oracle FREE Newsletter

Coronavirus-stocks-bear-market-2020-analysis

Eurozone Governments Blame Greek Debt Crisis on Speculators Instead of Looking in the Mirror

Politics / Euro-Zone Mar 10, 2010 - 02:37 AM GMT

By: Nadeem_Walayat

Politics

Best Financial Markets Analysis ArticleThe heads of Germany, France and Greece are continuing to highly vocally blame financial speculators for Greece's debt financing woes. This clearly amounts to political propaganda in an attempt to ms-direct the eyes of their electorate away from those culpable in bringing the crisis about against rising debt financing and insurance costs which is a SYMPTOM of the crisis and not its cause.


The problem remains in that uncompetitive countries such as Greece are unable to either devalue or print money to inflate their way out of their respective debt crisis as a consequence of the huge public spending deficits of as much as 12% of GDP. That is the REAL reason for crisis deepening amongst the PIIGS, and NOT because of financial speculators that are being perceived as being responsible for driving up Greek bond yields and credit default spreads (insurance), when all that is happening is that the market is pricing the bonds on the basis of the risks posed as a consequence of the government debt to GDP ratio and the ongoing public sector deficit which ensures a continuous stream of new debt issuance.

The rise in the yield demanded to finance Greek debt is a direct consequence of Greece lying to European Union, markets and their electorate as to the true extent of the outstanding debt and the annual budget deficit for many years. Which amounts to fraud, but instead of a criminal investigation into the epic fraud, the Greek and other Socialistic politicians are attempting to ms-direct public anger to the markets / speculators for selling debt that is high risk.

Greece presents a greater risk of default precisely because of the fact that the preceding Greek Government were a bunch of liars that hid the real extent of Greek debt for many years, where instead of limiting deficits to 3%, Greece had been running deficits of as much as 10% per annum, and therefore instead of having a debt to GDP ratio below the 60% limit, Greek debt stands at approx 135% GDP. It is this that is resulting in the markets demanding a higher yield for the higher risk of a country that cannot control government spending, which ultimately sows the seeds of a Greek debt default to some degree.

Greece's current situation of not being able to print money or devalue whilst being forced by the market to pay high interest rates is DEFLATIONARY, and it is not something that the Greek government can sustain i.e. the Greek government would collapse in a deflationary environment, which ultimately implies that something has to give, and that is for Greece to enact an inflationary policy which can only occur if a. Greece devalues its currency (which it can't), b. Greece defaults on its debts (which it might) and c. Greece goes on an money printing spree (which it can't),

As the in depth analysis contained in the Inflation Mega-Trend ebook indicates, ultimately governments will not allow for deflation and the easiest way to ensure this is by printing money, therefore the Eurozone will print money that will be handed to Greece, a policy which will ultimately be applied to the other PIIGS and even the likes of France (debt at 80% of GDP), which ensures higher future inflation, in advance of which the Euro is already depreciating against other major currencies.

So, no the speculators are NOT to blame, it is the leaders that lie to their electorates as to the true extent of deficits and accumulated debts which they are committed to as a consequence of being stuck within a single currency that they have no power to devalue or print more off which risks PIIGS deflation. Greece and other Governments are looking for escape goats to crucify as their populations revolt under severe spending cuts and heavy tax hikes, for at the end of the day it is the electorate that is responsible for electing a bunch of liars and fraudsters as their respective parliaments.

The Market / Speculators are one of only a few mechanisms that are currently available to European PIIGS stuck in the Euro to attempt to correct the imbalances, i.e. markets forcing PIIGS to get their budgets in order or pay a higher price (yield) for the higher risk. In the end they will inflate, they have NO choice.

The full implications of the unfolding Inflation Mega-Trend including forecasts trends for major markets for many years are contained within the NEW Inflation Mega-trend ebook that I am making available for FREE, which includes analysis and precise forecasts for:

  • Interest Rates
  • Economy
  • Inflation
  • Gold & Silver
  • Emerging Markets
  • Stock Markets
  • Stock Market Sectors and Stocks, including ETF's
  • Natural Gas
  • Agricultural Commodities
  • House Prices
  • Currencies
  • Crude Oil

The 109 page ebook is being made available for FREE, the only requirement for which is a valid email address.

By Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-10 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 20 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis specialises on UK inflation, economy, interest rates and the housing market and he is the author of the NEW Inflation Mega-Trend ebook that can be downloaded for Free. Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 500 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules