Wednesday, April 7, 2010

Update 4/7

Well the USD continues to strengthen versus everything else, including my Yen ETF, and therefore I'm going to bail out of it at tomorrow's opening. There are a few reasons; one is that one of the Fed govenors, Tom Hoenig, again came out with his call for higher rates. But I think that much more importantly, Greece is near the end. Today after the final bell, it was revealed that the Repo Market had turned against them and was selling Greek Bonds. I simpler terms, the people that Greece's Gov't do banking business with and who take Greek bonds as collateral have voted no confidence (when this happened to Bear Stearns & Lehman, they both went under the next morning) IMHO, we've now passed the point of no return; I believe it is now past the point of the IMF's help. The German central bank today refused to help Greek banks who are pleading for help. The Greek Govt will have little choice but to default if another week goes by with no massive aid package, setting off a huge mess for European banks and the Euro currency itself. I do believe the Euro will make it thru this crisis, but Greece itself will (rightly) slip into a grinding depression. When books are written in a couple years about Greece's collapse, it will be held up as an example of how not to deal with your economic problems. Ireland, as bad if not worse off than Greece a year ago, has made the right moves and is not going to collapse.

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