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Who Wins Greece?

Trading the Endgame

Posted May 29, 2012 at 5:06PM

As children, we all heard the story about a king named Midas who asked Dionysus, the Greek god of wine, to make whatever he touched turn to gold.

The king then accidentally touched his daughter and she turned to gold.

As Kurt Vonnegut would write, “So it goes.”

You've read in this space for almost two years that Greece would default and leave the euro...

The country simply couldn't afford its loans. Giving them more money in the form of bailouts wouldn't help.

Now CNBC is reporting Greece will leave the Eurozone on June 18th if the populist government wins the country’s elections on the 17th.

The Germans, who retire at 67, won't pay for Greeks who retire at 50, despite the remaining guilt of what their great-grandfathers did at Dachau.

Pot, Meet Kettle

If the Teutonic national sport is order, the Hellenes live for tax avoidance.

This idea of Greece being full of scammers was highlighted recently by Christine Lagarde, head of the IMF, who called the Greeks rampant tax-dodgers and told the Guardian, “As far as Athens is concerned, I also think about all those people who are trying to escape tax all the time. All these people in Greece who are trying to escape tax.”

This is rich. Lagarde is the top parasite of the world.

She is a pampered international bureaucrat who heads an agency that has consistently done more harm than good by destroying the idea of moral hazard and political sovereignty.

Not only does she make half a million dollars a year — but it's tax-free!

Regardless of the Sturm und Drang among free-spending politicians, the euro expansion has hit a high-water mark and will diminish.


My best guess on the end of the situation is that the Germans will cut the Greeks loose.

Over the past two years, the European banks have stalled for time as they unwound their more hazardous positions.

Now it's to the extent where the peasants are finally catching on.

The electronic bank runs in Spain, Greece, and Italy have been going on for more than a month. Spain's failed bank Bankia is the latest to make the news.


Those with money to provide bailouts are no longer interested. The Chinese sovereign wealth fund, China Investment Corp., recently said they will no longer be buying European debt.

With no more money and few political choices, Greece will be Europe's Lehman Brothers. It will be both the line in the sand and the scapegoat.

One idea is a Greek Euro2 currency valued at half the price of the original, which would allow Greece to grow through booming tourism — though they won't be buying any Mercedes in the next few years.

A cheaper currency will allow a de facto default and a fresh start for the young unemployed.

This situation would be punishing for retirees and others living off entitlements, but it would also provide an example to Spain, Portugal, and Italy as to the cost of default.

Dollar Strong

One upshot of all of this is that the U.S. dollar will continue to increase against the euro.

You can now buy a euro for $1.25, whereas four years ago, it would have cost you $1.60.

It will fall to $1.15 and then to parity.

Start planning your 2013 European Vacation today!

 eurochartFlip this chart over mentally if you are used to looking at equity charts.

I am trading this situation on multiple fronts.

A strong dollar means falling oil prices. Cruise lines, airlines, and gold miners are all running higher as costs decrease.

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Christian DeHaemer Signature

Christian DeHaemer

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Since 1995, Christian DeHaemer has specialized in frontier market opportunities. He has traveled extensively and invested in places as varied as Cuba, Mongolia, and Kenya. Chris believes the best way to make money is to get there first with the most. Christian is the founder of Crisis & Opportunity and Managing Director of Wealth Daily. He is also a contributor for Energy & Capital. For more on Christian, see his editor's page.

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