Martin Lee @ Sg
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John Mauldin on Greek Default

Are we reaching the end of the road?

Greece is now desperately selling some of its national assets.

This is the modern warfare – losing one’s assets via economic and political means. Will the Greek citizens be able to accept that or will they say enough is enough and walk away?

And we now have a new word in the investment library : Reprofiling

Reprofiling, soft restructuring, anything but the word “default”. But don’t they mean the same thing?

John Mauldin’s thoughts are in the video below:

If it does happen, the impact could be big.

European banks and ECB would be forced to take a writedown on their exposure to Greek debt.

Remember that a major part of the financial crisis in 2008 is not so much the subprime defaults, but the refusal of banks to trade with each other. This almost caused the whole financial system to freeze up and the governments had to inject massive liquidity into the system.

If money isn’t loosened up, this sucker could go down. ~ George Bush in Sep 2008

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1 comment
David says 8 years ago

Many macro-analysts have already predicted this scenario of mass insolvency and mass devaluation in spite of the massive papering by central banks to cover the problems via money printing and artificially keeping interest rates close to zero. However, in investments, there is a difference being right and making money. Many of these macro-people under-estimated the psychology and animal spirits of masses, and they lost out on the big rebounds in 2009 and late 2010. But ultimately, the macro situation cannot be escaped — the chips shall be called in and the masses facing the music. Probably not in the next 6 months, but definitely within the next 2 years. The next time round, governments around the world may not want or may not be in a position to use more QE to jump-start the economy and kick the can further down the road, as by then they will know that this method does not ultimately work. Those holding onto risk assets like stocks and commodities just need to be more nimble. Those who bought illiquid risk assets like expensive properties will need to be prepared for stress and pain, and/or have loads of SGD/gold on standby.

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