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Trading Greek debt crisis

Discussion in 'Shares' started by wdongli, 17th Jun, 2012.

  1. wdongli

    wdongli Well-Known Member

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    I did feel GFC would bring some collateral damages but I didn't realize the damages would hurt Europe so heavily.

    In hindsight, I was over-optimism in the April 2011, which came from my ignorance and arrogance. What happened is reality and I do want I don't waste my mistakes. The cost was $180,000 paper profit, which is big enough for me to pay my debt and be a full-time market student based on my rental from properties.

    It should be a amount of money, which means nothing for a successful Aussie business man but is very important who came to here at the late of 30s and have not business experience and good enough knowledge in economies, business, and psychologies.

    ***
    You have to admit your own mistakes and then you have choice to reduce the damages, get your toe in the right road again, and revive with sane brain. The lesson is that if we have ever been insane, we tend to be insane again and again.

    A lot of traders enjoy to find patterns in the chart but they don't have the senses to see the pattern of their behaviors. It is not because we are stupid in skills but we just have no ideas what can make us less insane and get the right skills for the right tasks.

    We have been modeled by our experiences, the education in our fields, the view of the world, and the sense to be self- and environment-awareness. This model give us the capability to earn for our living but it also makes us fail to get anything in the stock market but losses.

    ***
    Greek debt crisis has been destroyed too much globally. XAO just has been beaten again and again by the storms again and again for years.

    In this forum, it seems no winners but losers only as everywhere where some traders and investors still can talk. Slowly but definitely losers have stopped to blame or curse, which is good. We need to learn the lessons. We should not waste our losses for nothing.

    To most of traders and investors Greece crisis acts as a series of black swans, but it is not. The things have set its course for Greece and EU after GFC. We just fail to identify them and make us not lose.

    ***
    More and more traders and investors start to blame leverage after the damages have been done. It is understandable but wrong.

    After leverage was broken, you should get more damages and pay the cost of the broken leverage. Why do you take the leverage you could not be sure it would never be broken?

    Do you use leverage always in your home or office without following the safety rules and procedures? No one!

    ***
    It depends on the benefit and risk for you to use or not use the leverage. Why doesn't Buffett use leverage? Why he urges no losses? It is because it is very risky to run a business and run in the stock market. He wants to be strong to lift the thing he wants.

    Unfortunately most of us are not strong to life anything or even take any leverage but we do take the leverage to lift thing which could not be up. Greek debt crisis tells how people used the leverage for nothing but gear themselves into the hell.

    If you use the leverage you should be sure in worst case you could hold it and wait for the worst to pass by. Of course for safety don't lift anything you can not with or without the leverages.
     
    Last edited by a moderator: 17th Jun, 2012
  2. wdongli

    wdongli Well-Known Member

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    Why Greece let itself come to this?

    Failure means pains. People do get lessons from the pains.

    Pains can be assets if they are used for lessons. It is wise to know others' pains for your lessons. It usually happens you are wise.

    So it is good to see how Greece comes to this dire stage.

    ***
    Greece has been living beyond its means for years. Means is recursively reached destructively or smoothly depending on how far it is beyond the means

    1. The country joined the eurozone a decade ago, linking its economy to other European countries.
    2. Its economy grew strongly, but it suffered problems with corruption and bureaucracy.

    So it failed to put something aside in heydays for the rainy days. I made similar mistakes in IT peak and short sunny days in April 2011. Livermore commit suicide after he made a grand similar mistake.

    ***
    Over geared, cost run, and failure to collect tax for income, are the root causes of the dire Greece as they are the root cause of losers in the stock market without matter they are traders or investors.

    1. After Greece adopted the euro, the government borrowed heavily. Public spending soared and public sector wages practically doubled over the past decade.

    2. But as the government spent, tax income was hit because of rampant tax evasion. The labour minister has estimated one-quarter of the economy does not pay tax.

    3. When the global financial downturn hit in 2008, Greece's economy was not prepared.

    All of losers in the stock market make the similar mistakes again and again. Gear is not the root of the trouble but the over-gearing.

    When everything is dire, robs and pig chiefs lead the way under the name of common good! They want the fair to them only and no shame! Communists and Nazis were the experts to use the vulnerable pigs. You may feel pity for the pigs if you are not a pig.

    Couldn't you be a pig in the stock market and life? Pigs would be slaughtered regularly which includes the potential pig chiefs if they were born in wrong time!

    Do you notice the pigs with chains? They have the potential to be the pig chiefs. Be alerted when you see them!

    [​IMG]

    Pig chiefs are smart and pigs can be very stupid. If you don't realize it see the pic above and below and ponder at some philosophic and human nature level: We are very angry on the dire consequences. The crowd is no brain.

    [​IMG]

    ***
    Exuberant for the growth and no risk management plan

    1. It went into recession in 2009 after 15 years of growth and its budget deficit hit 15.4 per cent of GDP.

    2. It was admitted after a series of revisions by the government.

    3. It revealed the country's economy was in far worse shape than it had previously admitted.

    I was exuberant for my paper profit in 2011 and failed to manage the coming risks. Once XAO led into the imaginary GFC II in Aug 2011, I was in far worse shape than it had before.

    Sell in the harvest time when everyone in the party so that we can buy when all in the water.

    Never buy anything at peak to hold for struggling in a decade if not years in the hell.

    ***
    Why don't I sell my geared properties now? Australia is very conservative collectively.

    1. The land of each my property occupy more than 700 sqr meter. Australia has increased the population.
    2. They were bought at its dire in 1994/95.
    3. Australia building industrial has declined too much and no enough houses for its increased population.
    4. Negative gearing would be there when houses are not enough.
    5. The far away suburbs are too expensive to work(time to work). All of new suburbs built between 1995-2000 in Perth performs worse than the old suburb, where supply were bigger than the demand before all were sold out.
    6. The population in Australia are wise enough to know the expense in time. WA has the highest population increase which needs policy changes to update the old city suburbs.

    ***
    Don't expect policy change in days. House owners don't want new houses for more population.

    Statistically it means more crimes and traditional life style would be challenged. We all hate to change. One thing is sure that national power = wealth per head + population.

    Policy makers want the power without matter how voters want. In 1995 I could not see too many cars in the free way but now you are always headache in the traffic.

    ***
    It is a waiting game for the policy change and your turn for big or small fortune.

    The least effort way for government is to remove negative gearing but it would worsen the supply side. The more the unbalance of supply and demand would result higher price. To supply more houses, it has to allow more house in a land over 700 sqr meter: it could result in land price up and house price down. Once it happens I would sell to close my decades' investment.

    Could I be wrong? Possibly but the risks are fully buffered by the accumulation of the price for nearly 20 years. The negative gear has been changed into positive gear.

    ***
    Why does Buffett buy and hold?

    It is because he buys the profit growth for long term. Why do you buy and hold? It is possible you buy for the fade growth and it can go away. Why is it possible? You are passive and don't really know what could result in profit growth.

    Why doesn't Buffett take over-gears? It is obviously stupid. You are stupid not to know the difference between good or bad gears. You have to spend less than your means and the expenses including the service of your gear should be less than all of your income.

    So if you check the leverage you should check your stupidity first. You have to know leverage is leverage and business is business, don't you?
     
    Last edited by a moderator: 17th Jun, 2012
  3. wdongli

    wdongli Well-Known Member

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    Why Greece needs the bailout?

    I did wonder why does Greece need another bailout and why others just want to bailout it? I still could not figure out all and hope I will later.

    1. Greece had to be bailed out in 2010 because it could no longer afford to borrow money commercially.

    2. It had debts to pay and because it could not afford to borrow money from financial markets to pay them, it sought help from the EU and the IMF.

    3. The plan was to give Greece time to sort out its economy so the cost for it to borrow money commercially would come down.

    ***
    But worse became worsen and it did not happen according to plan.

    1. The ratings agency Standard & Poor's downgraded Greece's credit rating to the lowest in the world.

    2. The EU's big players, notably Germany, France and the European Central Bank, have struggled to work out the details of the second rescue package.

    3. Austerity has been introduced and things became worse. More and more Greek felt unsustainable of the dire.

    4. In the dire, who can make the crow feel better win. So less voters for the parties for austerity. The worse is no any parties could work together to form a government.

    ***
    It is true worse can be worsen but it comes to a time we can see what the worst could be.

    1. No one knows what the election result now
    2. G20 started some proactive actions. Market went up for the actions
    3. Still no one know the election result
    4. Greece puts all of the financial systems at the turning point.

    Greece is great to set the turning points always even I don't know where we go now. Don't know don't do.

    ***
    All of us should know why European governments are keen to avoid a "hard default."

    It is obvious now as the "hard default" could threaten banks throughout the eurozone and further afield. If everyone knows now why do you bother to highlight it? The lessons for next bust. All of bust come in after cost running and expense running. We tend to forget what happened before.

    Some things need to remember!

    ***
    We should know the longer the crisis drags on, the greater the risk that contagion will spread to other troubled eurozone economies like Ireland, Italy, Spain, and Portugal.

    These four spent much more than their means too. Greece itself is not a problem to EU and this world but if Greece drags other four down, all would feel the dire globally. Some one said it is too expensive to rescue anyone of these four.

    1. A default by Greece would hammer the banks that hold its debt, including the European Central Bank and big French and German lenders.

    2. It could also prompt credit markets to freeze up, as happened after the Lehman Brothers collapse in 2008 when banks virtually stopped lending to each other. Another Pearl Harbor? Soros said in three months we should know.

    3. If the Greek debt crisis becomes a worst-case scenario, it would be a catastrophe and humiliation for the European Union, which launched the euro in 1999 as its most ambitious project and a symbol of the continent's unity.

    ***
    Greece make the unthinkable became high probable reality ahead: that the eurozone might break up, either by the expulsion of Greece or the departure of Germany, the EU's paymaster, which might be tempted to return to its own currency.

    However the gamblers in stock market bet on G20 now. I guess these gamblers know what they want and should like to pay the cost for the high return from this dramatic event. However the capital flow was thin last Friday.

    More broadly, the Greek crisis reflects an inherent weakness in the structure of the euro:

    1. A currency zone with a "one size fits all" interest rate for a set of widely divergent economies
    2. 17 different countries running their own fiscal policies.
    3. It was the first political and economic project like EU and errors and trials would consume the traders and investors
    4. No a collective goal politically and financially when things are dire even all want to trade without limitation.
    5. How the crisis plays out will determine the failure or survival of the project.

    No individual can do errors and trial with unaffordable cost. Project can be gone but life must go forward.

    Warriors are consumed in errors and trials. Service business to the warriors should avoid collateral damages when the warriors have been consumed.

    ***
    Do remember Livermore gambled too much on a very high-consequent event, in which the market played the card against him.

    No one could say Livermore was not one of the greatest traders in 1900s. No one could say his destination was not dire. He made the resources for his grave. The trigger event for him into his grave was a Japanese earthquake if my memory is not wrong. When I read the books about him I could feel his desperation and depression in his last day!

    Now the stock market is on a high consequent road for two ways. Be safe first and then bet!
     
    Last edited by a moderator: 17th Jun, 2012
  4. wdongli

    wdongli Well-Known Member

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    The crowd->crisis stimulant!

    Fair deal is what the people chase after but it could not be the case in dire crisis like Greek debt crisis. It is about survival and leave the door to better future open with a lot of pains. It needs great leadership which is not the case in Greece.

    The crowd without matter how the things would go they must be the losers. The key is what is necessary for the future and how much the cost the crowd would like to pay for a better future.

    As traders and investors you have to be not the members of the crowd in the crisis, which require that you know what the crowd would do and what it wants. It sounds cold-bloody but what else can you do if you don't want to die in the valley of death?

    It is about survival in the matters you could not control!

    ***
    EU debt crisis has run for 4 years.

    The Greek people have run out of patience with an ever-deepening austerity drive that has slashed public sector wages by one-fifth and pensions by one-tenth, leading to frequent strikes and protests, some of them violent. The crowd feel the pains, it wants to stop the pains without care about the cost, and in pains it forgets what it has spent. It is normal and you could not blame it.

    After IT bust, I was very painful and in pains to lose $400,000 paper profit, I cursed the management of ERG and OneTel and others. I was very primary then in instinct. This time after I lost $180,000 paper profit I was painful too but I just could not blame anyone else but myself.

    It is easy to blame, twist the words, and forget but very difficult to find the root cause of your failure. We are designed not to find our own problems but overwhelm or overwhelmed by the environment by lucks or knee-jerk reaction.

    It needs the courage to admit your fault. The problem is we are coward naturally. If you don't believe please read what you wrote.

    ***
    What happen in the daily life of the Greek crowd?

    1. The crisis has led to curbs on widespread early retirement, tax rises and cuts in benefits and wages.
    2. Greek said they refused to make any more sacrifices to get more EU/IMF aid.

    Simply saying, the crowd doesn't want to take the pains from their own faults or the faults in their agents, the government. How many traders and investors want to take the pains from their faults or faults of their agents?

    ***
    The problem is you have the right and then you have to take some responsibility. When you abuse your right you fail your responsibility and thing could be worse. To Greece things become worse day by day:

    1. Unemployment is rising: less income for the nation and individual; everyone is pinched and painful.
    2. Bank and utility workers, public sector contractors and even doctors have taken to the streets.
    3. Private sector workers blame the bloated public sector, civil servants blame tax cheats and many Greeks blame corrupt politicians for the country's problems.

    Do you know even some economists who have quit their job in Greece and found the job in US, complained that Greek should not be dealt with so tough? They are not wrong since politics and economies are about art. Few could be great artists, which we all know.
     
    Last edited by a moderator: 17th Jun, 2012
  5. wdongli

    wdongli Well-Known Member

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    Neo-Nazi surges in Greece

    Greek Neo-Nazi party Golden Dawn is expected to win more than 6 per cent of the vote.

    1. It will send at least 19 deputies to the 300-seat parliament.
    2. At the last general election in 2009, the group scored just 0.29 per cent.
    3. The Neo-Nazi surge comes on a wave of immigration and crime fears, as well as anti-austerity anger.
    4. Golden Dawn portrays immigrants as stealing Greek jobs and as being responsible for crime.
    5. It says Greece is a "rich country" which could "survive nicely" without the EU-IMF recovery deal.
    6. Nikos Michaloliakos founded Golden Dawn in the 1970s and his party was officially recognized in 1993.
    7. He is mathematician and was dishonourably discharged as a commando reservist after possessing explosives.

    All of major parties have been blown heavily. Worst is worsen so far.

    ***
    It said Neo-Nazi would fight against "world usurers" and the "slavery" of an EU-IMF loan agreement he likened to a "dictatorship".

    "The time for fear has come!"

    Golden Dawn hailed the dawn of a "new nationalist movement".

    "Hundreds of thousands of Greeks have dynamically joined the national cause for a great, free Greece," it said.

    ***
    Greece crowd's perception has been shifted greatly since last election.

    Is it possible Greece would need another election to exit from EU so that Neo-Nazi could take another 6 or 20% votes?

    Fearful but very interesting, isn't it? Self-destruction can be self-fulfilled. It is a closed loop until the self-destruction system cannot have enough energy to continue or stopped by external forces.

    1. In China the lasted self-destruction cycle ended when Mao died.
    2. In US, GFC ended due to the bailout the banks which were to big to fail
    3. EU debt crisis would end by what?
     
    Last edited by a moderator: 17th Jun, 2012
  6. wdongli

    wdongli Well-Known Member

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    Scenarios from Greece Election

    It was said there are four scenarios probably from Greece Election:

    1. Austerity win

    The centre-right "pro-European" New Democracy party emerges as front-runner but there is no outright winner.

    It forges a "national salvation" government with the socialist Pasok party, which also backs reforms in return for rescue funds from the EU, ECB and IMF.

    The coalition commits to the conditions of the latest €130bn bailout and terms are eased. Short-term stability could lead to more prevarication by Germany's Angela Merkel in dealing with greater EU fiscal unity.

    By delaying the crucial decisions, the eurozone staggers towards the next crisis.

    Likelihood 1.5 out of 10

    ***
    2. Weak government to be in Europe and Austerity

    Reform-minded "Austerity" forces win power but by a slight margin. A government is formed, but is constantly undermined by anti-bailout far-left Syriza party which becomes bold as opposition grows on the streets.

    The government falls in the autumn when called to pass further belt-tightening measures. The EU, ECB and IMF are encouraged by some to turn off the cash tap at Greeks' failure to honour austerity pledges.

    A possible contagious collapse in confidence.

    Likelihood 6 out of 10

    ***
    3. Anti-austerity radicals win

    Anti-austerity forces led by Syriza party emerge as the frontrunner. Syriza forms a government with Pasok and the Democratic Left. Another possible coalition partner is the populist rightwing Independent Greeks party after the orthodox KKE communist party rebuffs its overtures.

    Greece is on a collision course with foreign lenders as the government puts a brake on the EU-IMF dictated austerity and structural reform programme. Chaos erupts when creditors withhold loans and Greece is forced to declare bankruptcy.

    If Greece leaves the euro, Germany could be jolted into action and pursue fiscal unity in Europe, smothering any panic among other states. If the Germans don't act, it could lead to an economic armageddon.

    Likelihood 1.5 out of 10

    ***
    4. Another Election

    Neither New Democracy nor Syriza win enough votes to form a coalition government.

    After weeks of negotiations, it is announced that fresh elections must be held. The ECB, IMF and EU have no one to negotiate with. A disorderly default is likely as creditors lose patience.

    Likelihood 1 out of 10

    ***
    A little change on the article from Greek election: what could happen | World news | The Observer
     
  7. wdongli

    wdongli Well-Known Member

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    The following scenario come out of the Greek election:

    Weak government to be in Europe and Austerity


    Reform-minded "Austerity" forces win power but by a slight margin. A government is formed, but is constantly undermined by anti-bailout far-left Syriza party which becomes bold as opposition grows on the streets.

    The government falls in the autumn when called to pass further belt-tightening measures.

    The EU, ECB and IMF are encouraged by some to turn off the cash tap at Greeks' failure to honour austerity pledges.

    A possible contagious collapse in confidence.

    Likelihood 6 out of 10

    ***
    1. Now the weak government would be formed.
    2. What's the next? It would be decided by what policies of German and France and G20, and how Greece to avoid the failure to honour austerity pledges. The problem is if things not bad enough, the conflicted interests among the nations wouldn't let all work to get out of the valley of death collectively.

    What should we do? I still feel something must be very bad first and then EU can make a resolution whether it should go ahead in years.

    ***
    I prefer to see the thing going on for another 2 and half months.

    1. The global economies is still in its self-destruction mood.
    2. I roughly agree Soros' view: it needs three month for EU to get its mind.
    3. There are more than 50 nations which would change the government. From wars to cold war, from cold war to EU, there should be some tsunami to finally check EU's viability.

    ***
    Depression->hopes->optimism->over-optimism is a long process.

    Hopes should be very little at the beginning and it needs the time to foster more hopes before the optimism. Of course if I didn't make a series of mistakes to burn the paper profit in 2011, it is a good time to buy bit by bit when hopes become bigger and bigger.

    I am at a position where I should not buy and avoid any chances to be trapped. It is easy to say to get balanced of our portfolio but difficult to do. I need to slow down to crash the barriers to the wisdom in my brain. There are always opportunities but it needs the good brain to take.

    It sounds over-conservative but it is not bad to start from here. Anyway if XAO could go back to 5000, I would get some good profit in next Financial year based on my Plan A: do nothing. If it suddenly becomes worse due to Spain, Portugal, or Italy, I could start my Plan B: buy more after all crash in the blood again as GFC

    Anyway I do know now before the worst happens, cash is the king.
     
    Last edited by a moderator: 18th Jun, 2012
  8. wdongli

    wdongli Well-Known Member

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    Vision, where is it for EU?

    EU is a new project for human kind and human errors are never free from any new projects, political, science, and economies.

    In science we all allow the errors and trials, which are the root of science. Human believes we can introduce the science into politics and economies but their artistic parts tend play its high consequent parts.

    The crowd has its sentiment. It can work with the errors and trials to make the economies and societies up and down withe the damages no one likes to take. However human errors means ebbs and flows of the economies and societies.

    ***
    No one can stop the rolling if we could not be Gods. Too many people are predicting the death of EU as those who predicted the death of paper money in Dutch Tulip mania.

    1. Wars are terrible for human
    2. Economies and business need the harmonic environment
    3. Multiple cultures and nations in Europe needs better ways to be prosperous together
    4. Last 20 years EU did do a lot of good things but tiny structural errors in calculation would cost.
    5. GFC triggered the test of EU structure in fatal ways. Where would EU go?

    ***
    Theoretically EU is the first try for Europe to deal with the problems not by war but working together. We just don't know how long the project can let people pick up the confidence again.

    Me? I can not control it so I thought its scenarios for my action in stock market. I just zoom out for a holistic view so that I could find the trees the roots of the trees are healthy.

    I know it is not easy but if it is as easy as in the office, it would be better that all of us in the office not in the stock market. Where can you get the easy money? Nowhere! I would like to know more about EU and then know more about myself.

    ***
    If we really understand our human errors, we should understand why EU has its troubles and it would take sometimes to fix.

    After all the fuss over Sunday’s “knife-edge” Greek election, some wonder or confusion are unavoidable. The weak pro-bailout has implied that the surge of stock market should be the short version, and actually it looks, well, the short version.

    EU needs some structural changes in its root. Without these changes we could see a lot of swans which we should recognize. Traders and investors ignore the change requirement so that, suddenly, stock markets would decide not to. Not worth it, evidently. Too much effort.

    How much have you spent in the stock market? Have you got the vision, discipline, knowledge, and skills for your projects in the stock market? If you could not understand what happen in EU, you could not have the logic to know yourself. No self-awareness means the insane repeated failures.

    ***
    It is wrong if you don't feel good for the weak pro-bailout government in Greece. It is the force, big or small, for hopes.

    Markets clearly felt that Greece’s stark choice between staying in the euro zone or facing eternal exile and economic damnation in the form of a return to the drachma, or worse, was a box that required some serious ticking.

    That much is certain and market surged.

    ***
    We have to know just when everything seemed to change, it didn’t. Yes, the New Democracy party received the largest share of the vote, at just under 30%.

    And with that, the immediate risk of Greece casting aside the euro faded somewhat. But political deadlock is still potentially visible on the horizon. The nation still needs to hack a coalition government out of the marble. Greece’s debt burden and economy still look like a grisly traffic accident.

    Cinderella’s little glass slipper must fall off and the carriage we are all riding are the shabby Spain Or Italy Or both Or more. Clouds is still too heavy to ignore the probability of the tsunami.

    ***
    Don't forget our deduction can be wrong due to the lack of some critical information so that we need to review the psychological cycle and update our minds times by times:

    [​IMG]
     
    Last edited by a moderator: 19th Jun, 2012