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Papandreou - the gambler - should be thrown out of office

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Papandreou - the gambler - should be thrown out of office

Postby Eurusd Trader » Thu Nov 03, 2011 5:50 am

The Greek referendum – according to Papandreou – will be held at the beginning of December and in reality will be a referendum on Greece’s Euro membership. This was the message he had last night when facing the frustration and anger among other world leaders who have tried to help the debt ridden country for years now.

Papandreou is a gambler – like many politicians. The difference between him and most others is that he thinks he can do whatever he likes. He has been in office for a long time – the same office his father held – as did his grandfather. The Papandreous are a dynasty which has been running Greece for too long. They have got too used to it and they don’t know when it is time to go – because they have never thought about leaving.

The dynasty is responsible for taking Greece to EU and to Euro – cheating their way through formalities and criteria – which they in reality never met.

Entering the union they were given the gift of borrowing cost almost to the same level as Germany – to them a gift – which they couldn’t resist. 340 billion Euros of debt were accumulated – very little invested and most of it consumed. When you give your electorate 5% annual salary increases on borrowed money – and you do it for years – then it is bound to go wrong. You can buy yourself votes this way – but when the coffin is empty and no one will lend you anymore – then the fun is over.

The fun should also be over for Papandreou. The Greek parliament should approve the agreement with EU – to stand by their obligations. Then – on Papandreou’s request to parliament for the permission to hold a referendum – they should say no. A referendum was never part of the deal with EU – and that is what the Greek parliament should tell him. Faced with that defeat he should resign and new elections should be held. Then the Greeks should throw him out of office. The guy has stayed in office for too long because he doesn’t know what it is to be accountable anymore.

Europe has reached the end of their patience with Greece. Payments likely will be withheld until Greece has made their mind up whether to meet their obligations and whether to stay in Euro or not. EU has tried to help – but if Greece is not willing to be part of this anymore – so be it.

For Papandreou I just hope for an early exit – possibly already on Friday. I have little sympathy for a guy who is responsible for running up huge debt for his country and then to leave it up to his electorate to decide whether they should repay the debt or not.

If the Greeks think that the easy solution is to run away – they will for sure be feeling lonely – and very quickly.

For EU and IMF it is a clean cut case. Withhold money until they have made up their mind.

EURUSD slipped slightly on the Greek news throughout the night – but nothing dramatically. The move lower – after a day of noticeable gains – was triggered in NY session – and more from Bernanke’s press conference. While containing no news – the FOMC meeting still looks to be swirling around not knowing what to do with a US economy which now looks to be going on slow wheels for at least another two years. Stock markets were not encouraged by what they heard and EURUSD followed as they still go tandem.

Today we have the first ECB meeting headed by its new President Mario Draghi – or “super Mario” as he is called in Italy.
ECB faces an interest rate dilemma. Pressure is on the central bank to lower interest rate as this would help debt ridden countries lowering their borrowing costs. But the main mandate for ECB is to provide price stability and this week’s CPI figures for the Euro-zone showed that inflation is still higher than what the ECB likes.

As such – it is likely that rates will remain unchanged.

Trichet in his eight years as ECB President made his press conference an entertaining sequence for markets after the monthly ECB meeting. Entertaining because of the key words we would be looking for – a clue to future interest rate changes or changes in other monetary activities.

Whether Draghi will be of the same entertainment value and provide the same volatility play for EURUSD throughout his 45 minutes in the spotlight – remains to be seen. All eyes will be on him – and we wish him good luck.

A few sentiment indices from the service sector on both sides of the Atlantics are also out today – but in light of the ECB meeting as well as the continuing Greek saga – neither of them are expected to grab any attention.

The EURUSD starts the day a bit lower than yesterday. I think dips are limited in light of the uncertainty Greece is causing. The Euro is not going to make it or break it because of Greece.

This week I have found levels below 1.3700 as interesting to buy and yesterday I sold a bit on levels above 1.3800. I will repeat this also for today – but likely stretch the upside level a bit further as I see the possibility of a bit higher level towards the end of the week.

Tomorrow I will go through my expectations for the G20 meeting. I find this meeting important and interesting in many ways. One reason is that it is the first meeting I can remember where the US will not set the Agenda, nor dominate the meeting in any way. It will be about global growth and EU debt worries - two areas where the US has very little to contribute at moment.
Eurusd Trader
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Joined: Sat Oct 22, 2011 11:20 am
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