Freaky Friday: Stock markets nervous as Grexit potential grows

Instead of negotiating—seriously—with EU representatives, Tsipras is in Moscow chatting up Vladimir Putin. U.S. trades getting defensive ahead of the weekend.

Marx and Engels.
Marx and Engels. Still the go-to guys for economic and social chaos as Tsipras ad Putin well know. (Via Wikipedia)

WASHINGTON, June 19, 2015 – Instead of seriously negotiating 24/7 with the EuroChiefs Friday, Greece’s Communist PM Alexis Tsipras is away from Athens, having hitched a ride north where he’s cavorting with fellow traveler Vladimir Putin in Moscow to talk about… what? Is the crappy, sputtering Soviet Russian economic engine about to bail out Greece’s government-heavy and therefore bankrupt socialist economy? Dubious.

What’s likelier is that Vlad the Impaler is looking to mess with European government heads by doing some kind of military-oil-gas pipeline deal with the Greeks to put more pressure on the Eurozone to put less pressure on Vlad and his crony capitalist criminal enterprise. Or maybe he’d like to dock Russian warships next to NATO warships in Greek ports. Now there’s an interesting thought.

Read also: Stocks soar, ignore Greece, Charleston slaughter and reality

Such an arrangement, whatever its outlines turn out to be, would also serve the purpose of screwing the U.S., which is currently incapacitated, deprived as it is of rational planning by the Destroy-America-First administration of Vlad’s fellow Communist and post-Colonialist pal Barack Obama. America’s Duffer-in-Chief is the very best U.S. friend a former KGB operative could conceivably have.

Barack Obama and Vladimir Putin. (Via Wikipedia)
Barack Obama and Vladimir Putin. (Via Wikipedia)

Oh, and yes, Greece is a NATO country supporting a NATO military presence. Where would all that go, given that neighboring Turkey is also off the NATO reservation, courtesy of its stealth-Islamofascist Erdoğan government. Which is also involved in pipeline machinations, BTW. Which could involve the Iranians. With whose mad mullah criminals Obama is desperate to strike some kind of anti-U.S., anti-Israel deal, and soon.

Confused yet by this international political soap opera? We are, but we’re not. We’ve seen this story plenty of times before. It’s just that the U.S. used to have a solid and reliable foreign policy, no matter which party held the White House. But now, we have “fundamental change.” Putin, ISIS and Iran like it a lot. So do the Chicoms.

With President Obama preferring his golf game over his job over the past seven years, the usual suspects have undertaken a sustained effort to re-shape the world back into the Cold War configuration we thought we’d already defeated. The Greece piece is simply becoming a fortuitous part of the puzzle as the never-ending Axis of Evil reconfigures itself yet again.

Read also: Putin’s game: Europe’s death by a thousand cuts

Greek Prime Minister Tsipras hates the European elites. He has decided their demand that the Greeks reform their oligarchy-kleptocracy are therefore invalid (because he says so), and so, apparently, is choosing to flip them all the bird rather than actually try to reach some kind of accommodation that will keep his country in the Eurozone as he (insincerely) claims to desire.

Tsipras, Syriza.
The victory in Greece of Alexis Tsipras and his Marxist Syriza Party is making markets edgy. (Composite photo by T. Ponick via Wikipedia sources)

The Russians are happily to encourage this leftist street-theater, since they enjoy flipping the bird at their opponents as well. And as a result, the confusing, improbable euro-Greek mess marches on inexorably toward what looks to be a rotten conclusion for all, but mostly for the Greek people.

Evidence? Greeks have been staging massive runs on their major banks this week, with withdrawals reaching in excess a billion euros over the past 24 hours alone, according to sources like Reuters. They’re not going to wait for what has become obvious to all.

Even as it draws the net tighter around the intransigent Greek government, the European Central Bank (ECB) is still trying to maintain some liquidity for the Greek banks lest they be forced to close their doors, which would likely lead to rioting on a massive scale, something the Greeks do very well indeed.

Read also: Latest Trojan Horse: Greek debt now “odious” and illegal

But every time the ECB sends more euros, Greek savers pull the latest tranche out of their banks as well. The Greek banks are furious with what’s going on, and are actually siding with the ECB, infuriating Tsipras.

Summing up the current situation in an interview with Germany’s venerable “Der Spiegel,” EU Commission President Jean-Claude Juncker observed:

Had I said at the beginning of the negotiations that a Grexit was an option, it would have unleashed a wave of speculation on the financial markets. Apparently, there are some in the Greek government who have misunderstood and believe that there is someone in Europe who can pull a rabbit out of the hat in the end. But that is not the case. I have warned Mr. Tsipras many times he shouldn’t depend on me being able to prevent a failure of the talks if that isn’t desired by the other side. We should do everything we can to prevent a Grexit, but to do so, both sides must exert themselves. In the end, I would prefer the rabbit to bear the Greek national colors.

It looks like the rabbit is already bearing those colors.

We simply can’t keep up with all this stuff today, so we direct you to CNBC’s surprisingly thorough liveblogging of the ongoing Greek drama right here. (Update/Note: At some point this evening as Europe goes to bed and begins its own weekend, this link may close down.)

Meanwhile, what the heck does all this sturm und drang mean for the Maven and his dwindling band of fellow individual investors?

Simple answer: it’s impossible to predict. Stock market averages are all off today after yesterday’s irrational exuberance. The Maven’s accounts, while positive earlier in the day, are beginning to slip in value like pretty much everything else as trading approaches Friday’s 4 p.m. EDT close.

Markets are treading water now. Even the world’s central banks really have no clue as to what a Grexit might mean if and when it happens.

Saner elements of the Greek government, if any still exist, may try to work with the Eurozone for some kind of short-term liar-loan fix that kicks the can down the road again for a little bit. But eventually, something will have to give.

German Chancellor Angela Merkel - Photo courtesy of Wikipedia
German Chancellor Angela Merkel – Photo courtesy of Wikipedia

Germany has already telegraphed it has prepared defenses for a Grexit scenario. Many Eurozone countries have likely done the same.

The German people in particular are fed up with the massive use of tax dollars to prop up a small country that has no intention of normalizing its economy for growth rather than graft. The German government under Angela Merkel can no longer support Greek intransigence without imperiling her party. So she won’t.

We think the Eurozone is prepared as much as it can be for a Grexit. Should it happen, we would guess that after two or three days of extreme international market violence due to the perceived ripple effect, things should soon settle down for most countries that still have viable economies.

(We also think this is at least part of the reason why the U.S. Fed continues to stall on that interest rate increase. Right now, yet another market upset is potentially like pouring gasoline on a roaring fire.)

Read also: ‘Grexit,’ Fed minutes stories resemble ‘Flash Gordon’ serial

On the other hand, we don’t think the Greeks have thought this whole thing through. But left-wing ideologues like Tsipras rarely think economics through, and they don’t care about their people or corporations either. Too capitalist. Only Marxist dogma matters. “The people” are simply collateral damage.

The average Greek Man on the Street will likely be very sorry he voted these clowns in at some point. We hope. People can learn. But, as we learned in 2012 here in the U.S., sometimes the learning comes a little too late.

Today’s trading tips

gold coins motoyenWe’re in an ongoing situation where every trading move may be the wrong move. We dumped some of our double short S&P 500 ETF position in SDS on Thursday. But we’re tentatively adding back to it at lower prices today. Meanwhile, we’ve shed a couple of perpetual preferred stock positions. Influenced by the potential for Fed interest rate increases later in the year, they are continuing their slow downward trajectory.

We’ve got a tiny bit of Swiss silver bullion ETF SIVR in one portfolio. We’d like to get a little gold in the portfolios, given that it’s usually a hedge against catastrophic currency events. But gold continues to be manipulated, and it’s hard to trust how it will behave next week. So regretfully, we’re holding off on purchasing shares of Swiss gold bullion ETF SGOL until next week. Perhaps.

Cash is king. Hold it through the weekend.

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Terry Ponick
Biographical Note: Dateline Award-winning music and theater critic for The Connection Newspapers and the Reston-Fairfax Times, Terry was the music critic for the Washington Times print edition (1994-2010) and online Communities (2010-2014). Since 2014, he has been the Business and Entertainment Editor for Communities Digital News (CDN). A former stockbroker and a writer and editor with many interests, he served as editor under contract from the White House Office of Science and Technology Policy (OSTP) and continues to write on science and business topics. He is a graduate of Georgetown University (BA, MA) and the University of South Carolina where he was awarded a Ph.D. in English and American Literature and co-founded one of the earliest Writing Labs in the country. Twitter: @terryp17