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TMFMmbop (30.19)

The EU comes through for Greece...for now



April 12, 2010 – Comments (4)

Yes, we were in Greece not too long ago and we wrote the following observation in our debrief (Global Gains membership required) upon returning home:

We learned that the rest of the members of the E.U. are more committed to preserving the union than some their political rhetoric would indicate.

Thus, we were among the minority not surprised by the announcement over the weekend that the EU would be stepping up with a more than $40 billion aid package -- and potentially more -- to help the country to help it handle its debt load. Now, there are still some issues to work through such as how the money will be disbursed and if Greece will be able to successfully implement its austerity plan, but it's clear that the political will to preserve the EU is stronger than we and others initially thought.

That said, this is good news for Greece and buys the country time to get back on firmer financial footing. Further, we stand by our opinion that there remain a few choice opportunities among Greek equities despite our continued bearish stance on the euro. One reason for this is that ratings agency Fitch continues to downgrade all things Greek. Why ratings agencies still have any clout is beyond me -- as has been shown time and time again over the past few years they're slow to act, backward looking, and easily manipulated.

So keep your eyes on Greek opportunities because our variant perspective is that this will ultimately play out better than the market thinks it will. And if you're interested in our specific picks, check out our premium special report, 3 Plays to Profit From the Greek Crisis.

4 Comments – Post Your Own

#1) On April 12, 2010 at 2:02 PM, FleaBagger (27.21) wrote:

I'm not going to deny that there might be individual companies in Greece worth investing in, but this is bad news for Europe, not good news for Greece. Greece will continue to p!ss away their capital on politically popular, unproductive programs, and Europe will by and large do the same. The EU is second only to the U.S. in most capital squandered by political pandering in the history of the world. The reason they stood behind Greece is because Greece is only a little more extreme than the rest of them in running up unsustainable deficits, crushing their private sector, and living for today at the expense of their children's future.

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#2) On April 12, 2010 at 4:19 PM, gfischer13 (62.21) wrote:

Tim -


I have been following your blogs / Greece reports quite a bit over the last few weeks.  What you know and what I know, but not a lot of other Americans: The EU and the Euro-Zone is not the same!!!  Great Britain and the scandenavian countries as an example are part of the EU but kept their own currencies and are not part of the Euro-Zone. Unless I missed it, you never went into these important details and your blogs can therefore sometimes be confusing/misleading.



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#3) On April 12, 2010 at 9:13 PM, TMFMmbop (30.19) wrote:


You're correct, of course, and I think I may have been a sloppy with how I used the terms in the past. Thanks for the heads up.


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#4) On April 12, 2010 at 9:15 PM, TMFMmbop (30.19) wrote:


I think you're underestimating Greece's commitment to the austerity plan. Time will tell, of course, but I believe they may surprise (though GDP growth will be negative to nonexistent for the next few years).


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