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Bilifuduo (96.35)




November 04, 2011 – Comments (3)

That number is the result of a confidence vote today by the Greek parliament in Greek Prime Minister George Papandreou. Papandreou won the confidence vote by a margin of 8 votes.  


Very close, huh?


That's how close we were to having global financial markets nosedive on Monday. The very notion of the confidence vote shook investor's confidence, one of the major reasons the stock market slid today. Greece, which has caused world financial markets to plunge earlier in the week due to its surprise decision to establish a referendum (which it later retracted) on the austerity vote, has the world spotlight, albeit in the most unfavorable scenario possible. It's amazing how captivated the world is by this debacle in Greece and the Eurozone and how much of it is affected by the Hellenistic internal drama; It is a rare occasion, indeed, when the U.S. financial markets are dominated by European decisions and completely sideline their own domestic issues.


Personally, I believe that our fears of a complete Vesuvian-esque meltdown of Greece and the Eurozone is unwarranted, but it seems as if the adage "When the U.S. sneezes, Europe catches a cold" needs a little tweaking:


When Europe gets sent to the ER room, we brace for MRSA. 

3 Comments – Post Your Own

#1) On November 04, 2011 at 10:25 PM, FleaBagger (27.49) wrote:

Or stocks are simply overvalued and just need an excuse to sell off back to normal valuations.

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#2) On November 05, 2011 at 12:54 AM, awallejr (33.64) wrote:

Greece is merely the headline excuse for an inevitable pullback after 2 days of double digit rising.  And that 2 days of double digit rising was because of 2 days of double digit declines.  I wouldn't say, however, that stocks are overvalued because there really are a lot that sell for less than 10 PEs.  Look at Xerox (a stock I have touted).  Sells for mid $8ish.  Has a somewhat respectable yield.  EPS is expected to be in low $1 range. And the company plans to do a massive stock buyback with its free casah flow over the next few years.  That is not an over valued stock.

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#3) On November 05, 2011 at 11:25 AM, leohaas (30.13) wrote:

Looks like you need a lesson in how European democracies work.

In most European countries, the power lies with Parliament. Parliament consists of elected officials belonging to political parties. Prime Ministers are typically not elected; they are appointed by the head of state (President or King/Queen), based on advice the head of state receives from political party leaders directly following an election. The guiding principle for appointing a Prime Minister is that he/she can obtain a vote of confidence by Parliament. Prime Ministers who fail to obtain such vote typically tender their resignation to the head of state.

Under this system, votes of confidence are not rare. Any type of controversial action by the PM or one of the other Ministers triggers such a vote.  What Papandreou did over the past week definitely qualifies as controversial. So to say that "the very notion of the confidence vote shook investor's confidence, one of the major reasons the stock market slid today" is nonsense: confidence votes are a way of life, and this one was 100% expected and thus priced in.

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