Greece Referendum explained. WTF happening?

(Posted Wednesday 12pm)

In case you had second thoughts, WTF is the abbreviation for Wednesday Thursday and Friday!

So, WTF’s happening globally.

·         Last Wednesday was D Day. If the EU summit had failed then, financial markets would make Lehman a child’s toy. The summit dragged onto early hours of Thursday morning before ‘the package’ was agreed on. Asia and Europe market rallied.

·         By Thursday evening, the US GDP figures came in very positive at 2.5%. Coupled with the early euphoria of the 3 package deal in Europe, financial markets roared all the way to US close. Most high yield assets like the Aussie, Kiwi, Loonie, Yen, Gold & Silver, shares, equities, Commodities moved substantially higher towards the month end of October, with the exception of the US dollar and Treasuries.

·         Friday was basically consolidation mood.

By Monday, Japan intervened (helping Japanese exporters at month end closing) the JPY unilaterally curbing the rally of the high yield assets.

By Monday evening, the Greece PM unleashed his ‘weapon’ announcing a referendum to the EU bailout package. The EU Finance Ministers were notified by Tuesday morning.

Global FM were puzzled, the EU FMs were stunned and looked silly. Who would ever, had dream of this ‘stunning and daring’ act by the Greek PM? The event certainly jolted financial markets globally. Why was this not mentioned during the EU summit? The ‘joker’ in Greece PM sleeve may be the most stunning trick of ALL times! The rest is history.

For benefit of doubt the audience who may not had understood of this ‘referendum’

1.    Greece spends more than they earn

2.    Greece accumulate substantial debts

3.    Greece can’t pay their debts. Greece asks financial assistance.

4.    Greece may go bankrupt and triggers a credit default. This would trigger PIIGS and financial institution holding Greece debts and probably rest of Europe and eventually globally.

5.    The EU summit which ended last Thursday packaged a deal which includes a 50% haircut from private investors. All is fine and global investors cheered.

6.    The referendum announced is about the Prime Minister asking the Greece people, “Should we take the bailout package?”

7.    In other words, at the edge of bankruptcy and default, would you ask for a consensus when the life buoy was thrown towards you? This bewildered everyone.

8.    Instead of being at mercy to the rest of the world, the rest of the world is within Greece’s mercy.

9.  There’s no immediate announcement/details of when the referendum would be? Immediate, next week, month, next year? How would this relate to the G20 leaders meeting at Cannes? Going back to a roller coaster.

The whole drama is well played, directed no other than the Best Actor award of ALL times! Beginning today, that is Wednesday, it W T F again!


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Tonight or rather Thursday morning, the US FOMC delivers the FOMC statement followed by Ben Bernanke’s press conference at about 2am.