Tags: hans | parisis | greece

Your Last Chance to Seek Shelter From Greek Firestorm

Wednesday, 05 May 2010 03:06 PM

By Hans Parisis

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Because we have the first deaths during the protest in Athens, we have to come back to Greece, because things are worsening at high — although not unexpectedly — speed.

Tuesday, Morgan Stanley stated in their analysis under the title "Our First Assessment of Greece's Loan and Austerity Package," that "in the case of Greece, it is unlikely that the IMF will demand its debt to be senior to others from the outset.”

Well, as European aid goes side by side with the IMF, this would mean that both blocks would only hold junior credit to Greece, which means that their aid to Greece would only generate debt that would rank after other Greek debt that already exists, in case Greece should default or fall into receivership.

Yes, and here I let the IMF out of the picture for the moment, that’s not good news for the European aid providers.

This situation could become, at least what I call, a weapon of mass destruction for the euro zone and for the European Union as a whole.

No wonder that we read today in the Financial Times Deutschland that “a new scandal is brewing over Greek aid … Markets are getting signals that the agreed credit will have so-called junior status. That means if Greece goes bankrupt ... holders of Greek state bonds will be paid back first and only if there is anything left, will European governments get their money back … The public is not being told about this. IMF money is traditionally super-senior — that means high on the priority list … I have heard the IMF and EU loans will enjoy junior status. That would be an absolute scandal … The question of the seniority of debt is relevant.”

The same German newspaper’s poll shows that more than 70 percent wants Greece to leave the euro zone immediately.

Wait until the German electorate gets knowledge about this.

You can be sure, it won’t be positive for Chancellor Merkel and her coalition partners as well as for the euro zone as a whole.

Maybe the Greek drama and its destructive impact would be easier to endure if the German government would stop taking the German people for fools.

Investors should take all this extremely seriously.

In my opinion, we are bound for a very serious, deep and long crisis with worldwide negative economical and political consequences.

No doubt, the U.S. dollar will benefit from it as it will be the safe haven.

In my opinion, I would “start considering cashing in my profits” and position myself on the sidelines in extremely liquid U.S. dollar-denominated instruments like one-month and three-month Treasuries.

Yes, I would not be interested in yields or interest compensation for the moment.

Yes, “Sell in May and Go Away,” could be here, once again.

We’ll have to wait until the bulls regroup at lower levels, which could be markedly lower.

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