The core of all (immediate) global uncertainty is Greece. That goes without saying. It is not so good for Greece, the EU, the US, China and for the whole world.
Was Greece PM call for a referendum logical/right?
In my opinion, YES!
You have been hearing all the bad news, comments from all over, the EU, large economies, Finance Ministers, etc.
· Is he crazy?
· Is he chopping off the hands that feed you?
· Is he meddling with politics, etc?
· Is he throwing the whole world into another financial crisis?
There are TWO sides to a coin! You’ve heard of one side.
It is a classic case of investors’ behavior between the US and the Asians interpreting Greece PM’s move! Though the US market closed with triple digit gains last night, the Asians are pushing for a triple digit loss this morning.
While thinking out of the box, here is my opinion of the other side of a coin!
Yes, the EU summit had come up with a 3 step solution to stamp the European sovereign crisis. The Greek package of a PSI 50% haircut is agreed upon.
When all goes well, global investors rejoiced as was what we witnessed last week.
1. Is Greece a democratic parliament? Yes
2. Are the Greeks pleased with the aid/ bailout package? More than 50% NO
3. Could they take the package and then disagree/revolt after receiving the handout? There is every possibility because of (2). Wouldn’t this be the next ticket to an endless, fearful roller coaster ride?
The call for a referendum by the Greece PM is to stamp ALL (future) roller coaster rides whether the outcome of the referendum is favorable or not! He does not want a quick answer. HE wants a confident solution. Hence the referendum!
In my opinion, I think the Greek PM is trying to energize confidence into the financial markets. Everyone is pushing the EU to a FAST answer without thinking of possible consequences leading to another disaster! It is just not clearly interpreted by MOST people, the objective by such a move. Sad!
Until most, if not ALL global investors, leaders of G20, Finance Ministers, etc notice/realize the objective of his call for a referendum, global investors’ mentality will dominate the market. And even if your understanding is logical, you will still need to move with the herds' mentality. Sad, very sad.
· Are the Greek happy with the aid package?
· Do they prefer the use of the Euro currency than the drachma?
Hence, the above will guide the Greeks to a conclusion to the referendum and stamp out ALL future concerns arising out of Greece.
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