The Economy Guy

Here are the closing statistics from Friday for our key indicators (02/10/12):

FINCON = 2

DJ30 – 12.970   up 47
US Treasury 10 Year Bond – 2.01%    up 0.01%
USDEUR  -  1.3147
Gold – $1725  down $3
Oil – $104.06  up  $1.71

Stocks were up slightly, but bonds were down slightly, and the euro was up slightly, and gold was sideways, and oil was UP, UP, UP.

So, I’m sure you got the message – it’s all going sideways.  Many are predicting a stock high point.  Oil looks dangerous – as gasoline is rising – do you see it?

Greece and the default…….

Is Greece going to get bailed out by the EU?  Probably, in my opinion.  However, the EU (and the Germans in particular) are making the Greeks very angry.  The Troika have mandated that Greece do the following:

1. 24 actions that the Greek’s have not done – must be completed before Monday.  I am willing to bet this won’t get done, and it will be overlooked.
2. The EU will place EU personnel in the Greek government to watch and audit the spending of money by the Greeks – and this is something new to the Greeks, and they don’t like it.
3. The Greeks must place the 130B Euros in an escrow account.   The must maintain one year’s bond payments in this account at all times – or else.
4. The Greek (two parties) government in power has signed they will keep to the promises made for future austerity.
5. Last Wednesday, the EU Finance Minister’s meeting in Brussels was cancelled and rescheduled for this Monday – as they would have voted AGAINST giving Greece the money on Wednesday.  However, let’s wait for Monday – but  they should say OK – I think.
   

Germany, Finland and the Netherlands are the countries driving the “deal” in Greece – and the Greeks hate being told what they must do.

The Greek Prime Minister was a resistance fighter during WWII against the Germans.  He has not forgotten what the Nazis did in Greece, and it is very personal with him.  He doesn’t like (one iota – a good Greek letter) to be told by the Germans what they can and can’t do.  He has likened what is happening to the Nazi era.

The German Finance Minister is raising the request of the Greek’s to agree to postpone their April election, and install a technocrat government in charge – ala Italy – and the Greeks are not amused.

In the meantime…..

The past Finance Minister of Greece was interviewed and made it VERY clear that Greece must have massive AID given it by Europe, in addition to the bailout funds, something similar to the Marshall Plan.   Otherwise, he said, Greece will not make it financially.

I believe that Greece is a downward cycle of economy.  The Greek government outsources many things, and is not paying its vendors – nor paying back the VAT they owe to them – to the tune of 8B Euro – not a small amount.

But, don’t worry, the Greeks will probably get their money, and the world will be safe for another 10 seconds.