Firebrand Greek Finance Minister steps down, offering faint hope new deal with Greece can be reached. Greek people running out of euros as clock ticks.
WASHINGTON, July 6, 2015 – Late Sunday morning, news hit the wires that controversial Greek Finance Minister Yanis Varoufakis had resigned from the Communist government of Alexis Tsipras. Wall Street stock futures, which had been down over 200 points, rebounded a bit at the news, although the Dow Jones Industrials futures remain off 150 points as of 8:45 a.m. EDT.
Varoufakis had become notorious for his casual and pointedly nasty verbal snipes at Eurozone leaders, particularly when it came to the Germans, who he correctly believed were leading the Eurozone charge to turn the long-corrupt Greek government into a more responsible one, at least from a fiscal standpoint.
But his abrasiveness reached the point where he became persona non grata at the intense negotiating sessions with Eurozone, ECB and IMF officials. As a result, he was pulled from the Greek negotiating team recently, a clear sign that Eurozone leaders had refused to deal with his grandstanding any longer.
Buzz is that Euclid Tsakalatos will be appointed, likely Tuesday, to replace Varoufakis. But whether Tsakalatos or another candidate will be able to improve the atmosphere so tarnished by Varoufakis’ anti-capitalist antics remains to be seen, particularly since, from a national point of view, things have gotten personal between Greece and Germany in particular.
As we opined yesterday, while we have no sympathy at all with the nonstop street theater being staged by Greece’s current Communist government—typical of such governments and currently a feature of our own—we do sympathize with the Greek people, who find themselves between a rock and a hard place.
Corrupt and crony capitalist for decades, successive Greek governments, led by whatever party, have allowed the country to become enormously top-heavy with aggressive, overly compensated government employees who’d clearly rather wreck the country than give up their absurdly lucrative salaries, perks and retirements.
In turn, substantial numbers of Greek taxpayers, particularly the wealthy ones, have cavalierly and routinely avoided paying their fair share of taxes for years and sometimes decades, hollowing out a Greek treasury already in serious trouble due to a lack of revenue. Inspired by the wealthy, the number of Greek tax scofflaws has grown over the years, compounding the problem.
It’s a disgusting spectacle of mass dishonesty on the surface. But then, who can blame the average Greek citizen for trying to get involved in the tax-evasion game when it seems everyone else is doing it?
Attempts by more recent Greek governments to make the system fairer and encourage people to step up and pay their taxes have thus understandably met with limited success. It’s what happens when a people become disgusted with their allegedly democratic government. They gradually lose faith in the system and, in a way, one by one begin to create their own Galt’s Gulch by gradually refusing to cooperate with the system, as is already quietly happening in the U.S.
There’s a lesson here if anyone is looking.
Today’s trading tips
Our best tip today is to lie low in the weeds. Monday morning’s opening trade will be down fast and hard, following on the heels of negative Asian and European market action, all in apparent reaction to the current Grexit Gambit.
Above all, if you choose to sell, which is not really advisable in an emotional market downdraft, absolutely do not sell with a “market” order, i.e., an order to sell a stock holding at whatever the next price happens to be. In violent, waterfall declines, that price could be significantly below what you thought you’d get.
Some stocks, particularly volatile tech and biotech issues, can “gap down” hugely, giving a big Maalox moment to those investors who panicked and tossed in market orders. High-frequency traders (HFTs) and other trading algorithms are often programmed to hunt down market orders and pick them off, the better to add to what we think are their often illegal gains. Don’t be one of their victims.
If we have further insights later today, we’ll post another short column. In the meantime, stay safe and don’t panic.Click here for reuse options!
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