Greece: Can There Be Any Hope?
Dennis Gartman has been directly involved in the capital markets since 1974 and has been publishing his daily commentary, The Gartman Letter, since 1987. Mr. Gartman is a strategic partner with the AdvisorShares Gartman Currency Hedged Gold ETFs (GEUR & GYEN) and lends his institutional insight to educate advisors and investors about trading gold in different currency terms.
The dollar has risen to and for a short while pushed through 121.00 Yen/dollar and the EUR has fallen to and had remained for a while through 1.1100. However, not uncommonly, the dollar has stopped as these new “Big Figures” loom large, but the trends are clear: money is moving firstly to the US dollar and secondly it is moving to the “English speaking” currencies and it shall continue to do so for quite some long while into the future.
Regarding Greece, we shall firstly state once again that although the German people have no respect for their Greek “cousins,” seeing them as shiftless, lazy, un-creditworthy freeloaders (and this really is not a too-harsh view of how the German populace actually does feel toward their Greek compatriots; all one has to do is ask Mr. and Mrs. Schmidt of Germany and stand back and wait for the resulting tide of vitriol for when the bounds of political correctness are withdrawn the truest, but worst, feeling surface), the German political and industrial “cognoscenti” know that Germany needs to keep Greece in the EUR-zone in order to keep the € weaker than it would be otherwise. They know this because they also know that Germany’s economic fortunes lie with Germany’s export trade, and exporters shall always choose to err in favour of a weaker rather than a stronger currency. Hence, despite the citizenry’s antipathy toward Greece, the “cognoscenti” will do what they must to keep Greece in the EUR-zone, and in the end will allow for any and all methods of extending Greek debts.
Thus, these series of massive debt maturities that shall be coming one after another after another on through the summer shall always go to the 11th hour and 59th minute, and there will be great wailing and gnashing of teeth on the part of the Greek and German authorities, but in the end these debts will be extended and Greece will remain within the EUR.
Again, we shall say that were we Greek we would long ago have dropped out of the single currency; would have stood down from these debt maturities; would have defaulted on those debts and would have taken up our old drachma in order to give our industries the ability to be competitive in the world market through devaluation. But the choice…at least for the moment… is not Athens’ to make. The choice is being made in Berlin, in Dusseldorf, in Munich et al. The choice is being made by ThyssenKrupp; by Bayer; by Daimler; by Volkswagen; by Siemens, by the BMW Group and by BASF et al.
All of that said, there is always the possibility that the Greek political figures… Mr. Tsipras and/or Mr. Varoufakis primarily… may become so exercised that threats shall be lobbed and confusion raised, but in the end it shall be Germany’s decision that shall prevail and Germany’s decision shall be to keep Greece in the EUR. After all… and this is perhaps the most important comment we shall ever make on this issue… the reason for the EUR’s existence other than to try to maintain peace in Europe after centuries of warfare is to allow Germany to export goods and services, keeping a tight German rein upon the other members of the “zone.”
Tuesday, Mr. Varoufakis went out of his way to promise that an agreement between Greece and The Brussels Group was near; that talks were progressing into what Mr. Tsipras called “The final stretch.” Mr. Varoufakis said that a conclusion to these talks was but a week or less away, only to have both gentleman embarrassed by ranking German and continental officials who said that the talks in question were not moving along at all and grave doubts about the efficacy of those talks remained. As Ms. Margaritis Schinas, a spokesperson for the European Commission, said: “More time and more effort is needed to bridge the gaps on the remaining open issues. We consider that progress is being made, albeit at a slow pace.”
And so the various side-shows continue. One after another of European, German and Greek officials shall take the centre stage for a few moments. We shall see the markets vacillate between hope and despair, but in the end at the 59th second of the 59th minute of the 11th hour of each debt maturity some means shall be found to keep Greece in the EUR and in the end the EUR will continue to weaken.