The Finger Pointing Over Greece Has Started
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 US dollar is quite sharply higher, rising violently on last Friday’s release of the Labor Department’s monthly Employment Situation Report. At one point, the EUR was trading to 1.1050 or so; it has since rebounded but is still down from the 1.1265 level we marked last Friday before the reports in question were made public.
The situation in Europe and the Greek situation remains at the centre stage for although Mr. Juncker… the European Commission’s President… and Mr. Tsipras… the Prime Minister of Greece…were photographed many times at last week meeting in Europe smiling openly with one another and seemingly enjoying the moment it is clear that the two are at odds today. Over the weekend, Mr. Juncker said that young Mr. Tsipras had “distorted” some of the proposals that the EC and the Brussels Group had put before the Greek government. Further, Mr. Juncker said that Mr. Tsipras is “dragging his feet” when it comes to putting forth proposals of his own and that time is running out on the debt problems there. Tsipras, as everyone knows, has a problem in that he would apparently prefer acquiescing on some of the issues being debated but his far-left wing within the Syriza Party… and his far left wing is really rather powerful and they are, after all, Communists…will not allow him to do so. In fact, there is talk that these far left members of the Parliament may withdraw their support from Mr. Tsipras, thereby creating the possibility of his government losing a vote of no-confidence, which would of course create even more confusion and more delays in the situation there.
We have maintained all along that Germany will do what it must to keep Greece within the single currency for Germany’s exporters need Greece in the EUR to keep the currency weaker than it would be otherwise. But if the far left does withdraw its support from the rest of the Syriza government in Athens, everything is off the table and default, because of an inability of the government to deal with the impending debts coming due, becomes a reality. Mr. Tsipras’ abilities as a conciliator within his own party are now being tested. We do not envy him his position… not even slightly.