The Greece Iran Oil Connection

As the west prepares a steep set of sanctions geared to stifle Iran, Greece raises an important query. The debt laden Hellenes would like to know what will happen to their vulnerable economy if the nation’s preferable Iranian oil supply contracts are replaced with more costly sources? Furthermore, if its GDP is impacted as a result of the untimely action, causing it to fall short of qualifying thresholds for its foreign funding, would that be overlooked by its critical debt holders?

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

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The Greece Iran Oil Connection

It’s a fair question for Greece to ask with its economic growth already under drag by the austerity demanded by the International Monetary Fund (IMF) and its European brothers. Greece sourced a significant 14% of its imported oil from Iran in the first half of 2011, and has sourced up to 23% of its oil imports from its ancient counterpart at times. According to a Bloomberg article quoting an anonymous Greek diplomat, Greece wants to ensure that if that oil is replaced, it will receive identical terms, which exclude financial guarantees.

Under normal circumstances, such a condition would not even be considered, but while Greece is under the economic microscope of the IMF, it wants to avoid new obstacles to reaching already challenging goals set by its lenders of last resort. Thus, last week, Greece held up the EU’s sanctions which would stop the flow of Iranian oil to the region. Agitated European officials have indicated that assurances will be made to Greece, but that the details will be worked out after this week’s agreement on sanctions is in place. It’s unclear whether such hastily made promises will be adequate for Greek politicians who cannot afford to place a single new burden on the shoulders of Greece’s aggravated populace.

Given Greece’s poor credibility, it is unlikely to find better terms on the open market than it gets from its likewise desperate Iranian trading partner. So, the question posed to Europe is, will it subsidize the difference in cost to Greece? Otherwise, some leeway must be given Greece, with regard to the steep economic goals it’s been forced to set.

What we are seeing in this latest situation is similar to the chaos that ensued when the former Greek Prime Minister proposed a referendum for the Greek people to decide for themselves whether their future would be with or without the euro currency. It shows that Europe is no stronger than its weakest link, and that the Greeks have more bargaining leverage than most understand. Finally, Greek politicians seem to be realizing that Europe needs Greece to stay solvent as much as Greece needs its financial assistance. Clearly, the most obvious concern to Europe is how a disorderly disposition of Greece would reel Portuguese, Spanish and Italian debt markets.

The current situation also highlights the important position Iran holds in the stability of the already shaky global marketplace. As the U.S. and Europe gear to pressure the Iranians, the question raised by Greece presents Iran with interesting information. Every plan to cut off Iranian oil is civil and arranged to ease the process, but the situation is not civil, if it is not economic warfare. So I have a question: What if the Iranians were to realize the plan set for them and understand their current position. They might just do the unexpected and cut off their own oil flow abruptly, and so, disruptively to Greece, Europe and the civilized world. Perhaps Greece’s negotiations with the EU in this regard should have been kept in closed quarters.

Editor's Note: This article should interest investors in National Bank of Greece (NYSE: NBG), Hellenic Telecommunications (NYSE: OTE), Coca-Cola HBC (NYSE: CCH), Teekay Corp. (NYSE: TK), Navios Maritime Holdings (NYSE: NM), Navios Maritime Acquisition (NYSE: NNA), Navios Maritime Partners L.P. (NYSE: NMM), Tsakos Energy Navigation Ltd. (NYSE: TNP), Overseas Shipholding Group (NYSE: OSG), International Shipholding (NYSE: ISH), Excel Maritime Carriers (NYSE: EXM), Safe Bulkers (NYSE: SB), Claymore/Delta Global Shipping ETF (NYSE: SEA), Genco Shipping & Trading (NYSE: GNK), Diana Shipping (NYSE: DSX), Danaos (NYSE: DAC), Tsakos Energy Navigation (NYSE: TNP), Ship Finance Int'l (NYSE: SFL), Nordic American Tanker (NYSE: NAT), Seaspan (NYSE: SSW), General Maritime (NYSE: GMR), DHT Maritime (NYSE: DHT), Brunswick (NYSE: BC), Marine Products Corp. (NYSE: MPX), DryShips (Nasdaq: DRYS), Top Ships (Nasdaq: TOPS), Eagle Bulk Shipping (Nasdaq: EGLE), Sino-Global Shipping (Nasdaq: SINO), Paragon Shipping (Nasdaq: PRGN), K-SEA Transportation Partners (NYSE: KSP), Euroseas (Nasdaq: ESEA), Star Bulk Carriers (Nasdaq: SBLK), Omega Navigation (Nasdaq: ONAV), Knightsbridge Tankers Ltd. (Nasdaq: VLCCF), TBS Int'l (Nasdaq: TBSI), Golar LNG (Nasdaq: GLNG), Claymore/Delta Global Shipping (Nasdaq: XSEAX), American Commercial Lines (Nasdaq: ACLI), Deutsche Bank (NYSE: DB), ITA (Nasdaq: ITUB), Banco Santander (NYSE: STD), Westpac Banking (NYSE: WBK), UBS (NYSE: UBS), Lloyd’s Banking Group (NYSE: LYG), Barclay’s (NYSE: BCS), Credit Suisse (NYSE: CS), Allied Irish Banks (NYSE: AIB), Banco Latinamerican (NYSE: BLX), Bank of America (NYSE: BAC), Citigroup (NYSE: C), Goldman Sachs (NYSE: GS), JP Morgan (NYSE: JPM), Morgan Stanley (NYSE: MS), European Equity Fund (NYSE: EEA), Vanguard European Stock Index (Nasdaq: VEURX), Powershares FTSE RAFI Europe (NYSE: PEF), Europe 2001 (NYSE: EKH), S&P Emerging Europe (NYSE: GUR), Ultrashort MSCI Europe (NYSE: EPV), Vanguard Europe Pacific (NYSE: VEA), Wisdomtree Europe SmallCap (NYSE: DFE), Wisdom Tree Europe Total Div (NYSE: DEB), iShares S&P Europe 350 (NYSE: IEV), Morgan Stanley Eastern Europe (NYSE: RNE), DWS Europe Equity A (Nasdaq: SERAX), DWS Europe Equity B (Nasdaq: SERBX), Fidelity Europe (Nasdaq: FEUFX), Fidelity Europe (Nasdaq: FIEUX), ICON Europe A (Nasdaq: IERAX), Pioneer Europe Fund (Nasdaq: PBEUX), ProFunds Europe 30 (Nasdaq: UEPIX), Putnam Europe A (Nasdaq: PEUGX), Rydex Europe 1.25x (Nasdaq: RYAEX).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

WARNING - Europe is Already Costing the U.S. Economy

What is vague is often ignored, and what is possible is sometimes given no weighting by investors, instead overlooked for what is most tangible and certain today. In this regard, so has the threat of European impact to the U.S. economy proven impotent to U.S. stock direction through late 2011 and so far in 2012. However, there exists tangible impact to the U.S. economy that is directly attributable to the nascent trouble in Europe. I suggest investors take note as well, since the impacts should only grow more obvious with time, with their effects eventually burdening U.S. GDP, and finally given credit in the valuation of American stocks.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

EU Hurting U.S. Economy

The evidence I point to, which shows the impact of European weakness on the U.S. economy, has come in two forms of late. We’ve seen it in the latest trade data and also in the actions of European companies operating in the U.S. Those actions have included the consolidation of American operations or other reorganization, and the laying off of American workers. That contribution to an already laboring labor market should be felt and understood for its seriousness.

The direct impact, though, is more clearly seen in the latest international trade data, reported last week for the month of November. The U.S. international trade deficit widened by 10.4%, to $47.8 billion, which was far more than economists surveyed by Bloomberg foresaw (consensus -$45 billion). While November imports were $2.9 billion higher, reflective of high season demand perhaps, exports were lower by $1.5 billion. That drop in exports was mostly attributable to goods, as the change in service exports was virtually unchanged. The decrease also countered the year-over-year trend, which showed exports up 10.3% from November of 2010. Certainly, Europe has endured a good deal of pain over the course of those twelve months, and it may be starting to cost U.S. exporters today.

According to the Department of Commerce, the decrease in exports was mostly seen in lower industrial supplies and materials demand ($1.6 billion); and also in capital goods ($0.2 billion) and other areas. That drop in industrial goods demand was counter to the year-over-year trend as well. Somewhat surprisingly, and perhaps contradicting this report, an increase of $0.8 billion occurred in consumer goods exports. Though, this could have been due to seasonal driver.

The most telling of the data came when comparing the month’s trends between Europe and China. While the trade deficit with China narrowed to $26.9 billion, from $28.1 billion in October, the deficit with the European Union widened to $9.7 billion, from $8.0 billion in October. It was the most marked increase in deficit among America’s trading partners.

While what we’ve just discussed is direct and clear, what is developing anecdotally is concerning due to its concealed nature. It thus has the ability of sneaking up on economists and strategists who may not be paying the closest of attention to peripheral information. Therefore, it could bite analysts, brokers and finally retail investors in the behind. Take note that my followers will not be found within that grouping.

While authoring my report on the Ugly Truth About the Economy, I took note of the number of announced corporate layoffs coming from European based firms over a very short recent time span. It was difficult not to notice given my bead on the newswire. Since the turn of the year, we’ve seen American worker layoffs by European based firms: Novartis (NYSE: NVS), Vestas Wind Systems (OTC: VWSYF.PK), RBS (NYSE: RBS), Delhaize (NYSE: DEG) and others. When pressure mounts on a European company, it must look more closely at the ROIC of its projects. While you would expect European based projects to be hit most severely, early stage efforts in the States that are not going to return on investment soon, must also be curtailed in many cases. That means American jobs are lost, despite the government’s declaration of domestic economic gains. It contributes to unemployment, and it depletes tax revenues, curtails consumer spending and costs us in unemployment benefit payouts. It will affect our GDP.

Meanwhile, money center banks with global operations are pointing to Europe as the source of their earnings disappointments, as rumors of related layoffs swirl. The latest to blame the European crisis for its direct and indirect impacts on its operations was Citigroup (NYSE: C) Tuesday. Analysts expect a fourth quarter loss from Morgan Stanley (NYSE: MS) in its upcoming report this week, on market and regulatory pressures. Goldman Sachs (NYSE: GS) will also report later this week. Citi’s Chief Executive, Vikram Pandit, shed light Tuesday saying, ”Clearly, the macro environment has impacted the capital markets and we will continue to right-size our businesses to match the environment.” Citi is cutting 5,000 jobs away, which is more than the 4,500 it said it would in December; that might reflect a deteriorating trend more so than discovered inefficiencies. Despite the already significant job cuts across major international banks with U.S. operations, we very well could see more from the likes of those already mentioned, Credit Suisse (NYSE: CS), UBS (NYSE: UBS) and the rest.

In conclusion, the impacts of European weakness on the U.S. economy are currently visible and already measurable. Yet, the U.S. stock market has reflected enthusiasm tied to a synthetically driven consumer sector and a misleading employment situation, which we discussed here previously. Considering that the struggling region accounts for 20% of American exports, and given its trajectory, it is capable of diverting American recovery and deserves more attention in the weightings of valuation and scenario analysis. The signs of this effect had until now been somewhat vague to see, but they are growing clearer with time, and I expect they will eventually be impossible for the stock market to ignore.

Article is relevant to Deutsche Bank (NYSE: DB), Banco Santander (NYSE: STD), ITA (Nasdaq: ITUB), UBS (NYSE: UBS), Westpac Banking (NYSE: WBK), Lloyds Banking Group (NYSE: LYG), Barclays (NYSE: BCS), Credit Suisse (NYSE: CS), Allied Irish Bank (NYSE: AIB), Banco Latinamericano (NYSE: BLX), National Bank of Greece (NYSE: NBG), Royal Bank of Canada (NYSE: RY), BBVA Banco Frances (NYSE: BFR), The Bank of Ireland (NYSE: IRE), Bank of Montreal (NYSE: BMO), Canadian Imperial Bank of Commerce (NYSE: CM), ING Groep (NYSE: ING), Citigroup (NYSE: C).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Bad Signs for Greece

The latest days’ news wire has been full of bad signs for Greece. While you have to infer a bit and see implications to developments in order to say so, it’s not too far a reach to see what could be stewing for Greece this winter is not a warming trend.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

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Greece May Yet Default

The latest omen came last week, when negotiations broke off between the Greek government and private bondholders. The effort is geared to liquidate about half of Greece’s private debt or 100 billion euros worth at the cost of the bondholders. It’s a lesser evil choice for the bondholders, which is only acceptable because it may help preserve the remaining portion of their investment in or loans to Greece.

This very important effort for Greece’s recovery is now also a critical step for its short-term survival. This is because it must be accomplished in order for Greece to qualify for its next tranche of aid funding from the international community. Representatives of the bondholders stated that they were stepping away in order to “pause for reflection.” The quandary is created because of math and capital markets, as the Greeks are really seeking more than the 50% cut discussed, because the effective market value of the bonds will likely drop immediately when the bond swap takes place. That said, if Greece recovers, the contract value should be approximated by market interest.

Clearly, if Greece defaults, bondholders will be left with empty hands, so Greece does have some negotiating power. However, the bondholders also know that Greece wants to avoid default and that they are needed for that process. It seems to me that whatever will satisfy the IMF is what should be adopted at this point.

Compounding the problem, Greece just reported that its budget deficit expanded in 2011 by 0.8%, to 21.64 billion euros. It was a bit better than the government’s revised forecast, but its details reflect fundamental obstacles to Greece’s economic and fiscal recovery. Despite all the government’s new taxes to lift revenues, and its expense reduction efforts, the budget still widened. That was because personal income tax collection actually softened and its ordinary budget revenue generation fell by 1.7%. Meanwhile, despite its cost cutting efforts, spending rose by 2.8% on the significantly increased debt service costs that plague the embattled nation. There should be no surprise here for readers of my column, as I’ve argued readily against the logic of harsh short-sighted austerity.

The budget deficit is supposed to have shrunk to a smaller portion of Greece’s gross domestic product. How you get there with GDP declining and the deficit rising defies my understanding. Maybe it’s European math. In any event, there’s very little here to reassure the troika nor the capital markets that Greece is making progress, and so the pressure remains.

It seems to me, given Standard & Poor’s sovereign debt slashing of much of the euro zone Friday, that it is hedging if not forecasting Greek default or some sort of unsavory result. Nine countries were downgraded in total, with the most damage done to France and Austria, which lost their top grades. Germany was spared, with its constitutional construct cited as a safety against its government’s potential for making poor decisions.

This coming week, the IMF resumes debt talks with Greece, sending a “mission team” to Athens as part of the review process. All the above discussed matters will be reviewed. Perhaps the presence of the IMF and renewed understanding of the criticality of “private sector involvement” will bring a conciliatory and cooperative tone and progress for Greece. However, the signs are bad.

Editor's Note: This article should interest investors in National Bank of Greece (NYSE: NBG), Hellenic Telecommunications (NYSE: OTE), Coca-Cola HBC (NYSE: CCH), Teekay Corp. (NYSE: TK), Navios Maritime Holdings (NYSE: NM), Navios Maritime Acquisition (NYSE: NNA), Navios Maritime Partners L.P. (NYSE: NMM), Tsakos Energy Navigation Ltd. (NYSE: TNP), Overseas Shipholding Group (NYSE: OSG), International Shipholding (NYSE: ISH), Excel Maritime Carriers (NYSE: EXM), Safe Bulkers (NYSE: SB), Claymore/Delta Global Shipping ETF (NYSE: SEA), Genco Shipping & Trading (NYSE: GNK), Diana Shipping (NYSE: DSX), Danaos (NYSE: DAC), Tsakos Energy Navigation (NYSE: TNP), Ship Finance Int'l (NYSE: SFL), Nordic American Tanker (NYSE: NAT), Seaspan (NYSE: SSW), General Maritime (NYSE: GMR), DHT Maritime (NYSE: DHT), Brunswick (NYSE: BC), Marine Products Corp. (NYSE: MPX), DryShips (Nasdaq: DRYS), Top Ships (Nasdaq: TOPS), Eagle Bulk Shipping (Nasdaq: EGLE), Sino-Global Shipping (Nasdaq: SINO), Paragon Shipping (Nasdaq: PRGN), K-SEA Transportation Partners (NYSE: KSP), Euroseas (Nasdaq: ESEA), Star Bulk Carriers (Nasdaq: SBLK), Omega Navigation (Nasdaq: ONAV), Knightsbridge Tankers Ltd. (Nasdaq: VLCCF), TBS Int'l (Nasdaq: TBSI), Golar LNG (Nasdaq: GLNG), Claymore/Delta Global Shipping (Nasdaq: XSEAX), American Commercial Lines (Nasdaq: ACLI), Deutsche Bank (NYSE: DB), ITA (Nasdaq: ITUB), Banco Santander (NYSE: STD), Westpac Banking (NYSE: WBK), UBS (NYSE: UBS), Lloyd’s Banking Group (NYSE: LYG), Barclay’s (NYSE: BCS), Credit Suisse (NYSE: CS), Allied Irish Banks (NYSE: AIB), Banco Latinamerican (NYSE: BLX), Bank of America (NYSE: BAC), Citigroup (NYSE: C), Goldman Sachs (NYSE: GS), JP Morgan (NYSE: JPM), Morgan Stanley (NYSE: MS), European Equity Fund (NYSE: EEA), Vanguard European Stock Index (Nasdaq: VEURX), Powershares FTSE RAFI Europe (NYSE: PEF), Europe 2001 (NYSE: EKH), S&P Emerging Europe (NYSE: GUR), Ultrashort MSCI Europe (NYSE: EPV), Vanguard Europe Pacific (NYSE: VEA), Wisdomtree Europe SmallCap (NYSE: DFE), Wisdom Tree Europe Total Div (NYSE: DEB), iShares S&P Europe 350 (NYSE: IEV), Morgan Stanley Eastern Europe (NYSE: RNE), DWS Europe Equity A (Nasdaq: SERAX), DWS Europe Equity B (Nasdaq: SERBX), Fidelity Europe (Nasdaq: FEUFX), Fidelity Europe (Nasdaq: FIEUX), ICON Europe A (Nasdaq: IERAX), Pioneer Europe Fund (Nasdaq: PBEUX), ProFunds Europe 30 (Nasdaq: UEPIX), Putnam Europe A (Nasdaq: PEUGX), Rydex Europe 1.25x (Nasdaq: RYAEX).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Greece has More Bargaining Leverage than its Politicians Understand

When former Greek Prime Minister Papandreou proposed a referendum for the Greek people to decide on whether to accept continued austerity and the “grand barter” agreed to by Greece’s new troika of slave masters, we learned something. As European bond yields went soaring from Spain across to Italy and even up to France, and as European kingpins arms went flailing up into the air in complaint, something became plainly clear. Greece has more bargaining leverage than its politicians understand.

Our founder, Markos Kaminis, earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

Relative tickers: NYSE: NBG, NYSE: OTE, NYSE: CCH, NYSE: TK, NYSE: NM, NYSE: NNA, NYSE: NMM, NYSE: TNP, NYSE: OSG, NYSE: ISH, NYSE: EXM, NYSE: SB, NYSE: SEA, NYSE: GNK, NYSE: DSX, NYSE: DAC, NYSE: TNP, NYSE: SFL, NYSE: NAT, NYSE: SSW, NYSE: GMR, NYSE: DHT, NYSE: MPX, Nasdaq: DRYS, Nasdaq: TOPS, Nasdaq: EGLE, Nasdaq: SINO, Nasdaq: PRGN, NYSE: KSP, Nasdaq: ESEA, Nasdaq: SBLK, Nasdaq: ONAV, Nasdaq: VLCCF, Nasdaq: TBSI, Nasdaq: GLNG, Nasdaq: XSEAX, Nasdaq: ACLI, NYSE: DB, Nasdaq: ITUB, NYSE: STD, NYSE: WBK, NYSE: UBS, NYSE: LYG, NYSE: BCS, NYSE: CS, NYSE: AIB, NYSE: BLX, NYSE: BAC, NYSE: C, NYSE: GS, NYSE: JPM, NYSE: MS, NYSE: EEA, Nasdaq: VEURX, NYSE: PEF, NYSE: EKH, NYSE: GUR, NYSE: EPV, NYSE: VEA, NYSE: DFE, NYSE: DEB, NYSE: IEV, NYSE: RNE, Nasdaq: SERAX, Nasdaq: SERBX, Nasdaq: FEUFX, Nasdaq: FIEUX, Nasdaq: IERAX, Nasdaq: PBEUX, Nasdaq: UEPIX, Nasdaq: PEUGX, Nasdaq: RYAEX

Greece has Bargaining Leverage

What is unclear is whether he knew what he was doing or not, but the former Greek PM was ridiculed across the American popular press and across Europe for his ignorant, if not negligent action. Though, we questioned within these pages whether it might be pure genius or simply his soft heart at work behind the untimely and completely unexpected political posture. We also wondered if the respected legend of Greek politics might even be reading our column, considering that we had suggested Greece’s politicians ask Greeks what they wanted just days before Papandreou’s so-called shocking proposal.

How the move will work out for PASOK in February remains unclear, but I would assume the sacrifice of Papandreou will save some seats in Parliament. It even gives PASOK a chance at the premiership, something that was highly improbable otherwise. But more importantly, we should take note of the reaction of Greeks, which was one of introspection; of the markets, which was catastrophic; and of the look in the eyes of European leaders, which was one of fear.

Greeks suddenly had to approach the situation from the perspective of the nation on the whole, for turning down foreign aid and turning away from austerity measures would also lead to Greece’s disorderly exit from the euro zone. That’s not something that even the hardest hit of Greeks are sure would be in Greece’s best interests. The result of this might perhaps lead an unemployed Greek to a café to think deeply about the issue, rather than to start fires at the steps of the Parliament.

The markets were shocked, with debt yields across other at-issue European states soaring just days after all seemed finally set straight. The markets anticipated an even more serious loss of confidence in the European Union and in the euro zone. After all, if the EU could not cure Greece, due to the interests of Greeks, then perhaps the same result would follow in Spain and Italy, and if Italy, then why not also France. That reality set European politicians straight, so to speak, and allowed us to see clearly that the great homeland of our ancestors did not have to just accept whatever proposals the stern troika declared at us. Indeed, Europe has a stake in Greece, and in keeping it intact in the euro zone.

Therefore, Greek politicians have been grossly underestimating their bargaining position with the troika. The constricting austerity measures shoved down the throats of Greeks do not have to be so burdensome to our economic sustenance, nor to growth. We have the power to demand a longer time-line to meet debt level goals and repayment requirements. We can experiment with creative, growth encouraging policies, and ease austerity on our nation to correct its inherent flaws in a manner less disruptive to a way of living embedded in today’s society. Therefore, social upheaval could be mitigated, and Greece could find a way out of this mess with its integrity intact and the finances of its people in existence. I suggest Greek politicians reconsider, and realize that they hold a stronger hand than they’ve been told. They should reweigh the fact that there is a consistency of Greece’s goals with those of the troika, the greatest of which is to keep Greece within the euro zone.

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Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

European Shares Doomed by Politics

The market mood across Europe was decided before the sun rose Tuesday. Pressure is intensified around Greek political leaders, as the IMF and EU are refusing to continue aid flows to Greece without written pledges by both major parties. Political bias across euro zone members has a disjointed union treading water. Thus, European shares were doomed today and will be so moving forward without political will and finally a determined path.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

Relevant tickers: NYSE: DB, NYSE: STD, Nasdaq: ITUB, NYSE: UBS, NYSE: WBK, NYSE: LYG, NYSE: BCS, NYSE: CS, NYSE: AIB, NYSE: BLX, NYSE: NBG, NYSE: RY, NYSE: BFR, NYSE: IRE, NYSE: BMO, NYSE: CM, NYSE: ING, NYSE: C.

European Shares Doomed

The troika is seeking written pledges from Greek political parties stating that they will pursue the austerity path agreed to through the February election and beyond. The entire situation has effectively placed Greece’s new Prime Minister Lucas Papademos on a stick for February roasting. The busy new PM met with the President of the Euro Group today, Jean-Claude Juncker, likely answering questions on this matter. The risk to U.S. investors here is of course of contagion across Europe, and the unclear result of a Greek default and falling out from the eurozone.

Forces are pressuring for the European Central Bank (ECB) to step up its bond purchase activity and for the EU to issue euro bonds. Such action would effectively force the significant investment of all European participants in regional recovery. They would have significantly increased vested interests, and so the Germans, with the farthest to fall from their state of independent grace oppose the idea. This division has raised doubts, at least here, about the EU’s ability to survive the crisis intact. And with global market entanglement, there would be no escaping a European downfall for U.S. investors. If the American banking risk outlined recently by Fitch, is not enough to get us, the deteriorating economies of Europe should weigh heavily enough.

European shares were down on the day as a result, with the Euro Stoxx 50 down 1.1%, the DAX off 1.2%, CAC 40 down 0.8% and the Athex Composite short 2.0%. European banking shares were off, with Deutsche Bank (NYSE: DB) down 0.9%, Banco Santander (NYSE: STD) off 2.5%, UBS (NYSE: UBS) down 0.9%, Credit Suisse (NYSE: CS) off 0.8%, Barclays (NYSE: BCS) off 3.0% and Lloyds (NYSE: LYG) down 5.1%.

Article is relevant to Deutsche Bank (NYSE: DB), Banco Santander (NYSE: STD), ITA (Nasdaq: ITUB), UBS (NYSE: UBS), Westpac Banking (NYSE: WBK), Lloyds Banking Group (NYSE: LYG), Barclays (NYSE: BCS), Credit Suisse (NYSE: CS), Allied Irish Bank (NYSE: AIB), Banco Latinamericano (NYSE: BLX), National Bank of Greece (NYSE: NBG), Royal Bank of Canada (NYSE: RY), BBVA Banco Frances (NYSE: BFR), The Bank of Ireland (NYSE: IRE), Bank of Montreal (NYSE: BMO), Canadian Imperial Bank of Commerce (NYSE: CM), ING Groep (NYSE: ING), Citigroup (NYSE: C).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Europe Comes Together in Desperation

In a matter of a week, the civilized world has witnessed leadership changes atop two democratic nations without election. The reasoning for this abrupt and somewhat unprecedented change in control was “necessity,” and in the place of the apparently inept leaders replaced, we find technocrats who seem perfect for the times.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

Relevant tickers: NYSE: DB, NYSE: STD, Nasdaq: ITUB, NYSE: UBS, NYSE: WBK, NYSE: LYG, NYSE: BCS, NYSE: CS, NYSE: AIB, NYSE: BLX, NYSE: NBG, NYSE: RY, NYSE: BFR, NYSE: IRE, NYSE: BMO, NYSE: CM, NYSE: ING, NYSE: C.

Europe Comes Together in Desperation

Even though I myself insisted that former Greek Prime Minister Papandreou should query the Greek people before moving forward with the EU’s grand barter, I never in my wildest dreams expected that within hours of publishing, he would actually call for a referendum. After all, such a referendum would effectively decide whether Greece would remain in the eurozone, which was something the Greek government was for months fighting tooth and nail for. Despite the protests and fires that continued on the streets of Greece, it made little sense for the government to give up on a deal that effectively forgave half its debt. We posited that it must thus be a genius political move by George Papandreou, which would effectively give new life to the dead government walking and the PASOK party. After all, the Greek people, if properly educated on the vote, would surely not choose a route that would take them into default and out of the bubble of the civilized European society they have mostly treasured since Greece’s initiation.

I suppose one might say this change in Greece made possible what was previously less likely in Italy, the disposal of the embattled and embarrassing billionaire Prime Minister Silvio Berlusconi. Berlusconi had been shy about implementing the austerity measures his European brethren viewed necessary to prevent crisis contagion. The support of his people was worn thin, as his scandalous session as the Italian Prime Minister dragged on. So by putting off financial reinforcement, Berlusconi sought to keep Italians in cafes rather than on the streets of Rome burning his effigy.

Former European Commissioner for Italy, Mario Monti, the technocrat of choice for the job accepted the role over the weekend. Economic expert, Mario Draghi might have better matched with Greece’s turnover to Papademos, but he’s busy in his new post at the European Central Bank. The ouster of Berlusconi came at once and as a condition for the united passage of austerity. Berlusconi’s opponents in the senate determined to not vote, allowing the measures to pass; it then moved forward to the lower house for passage, and so austerity and Monti have been received in Italy.

The latest European tone has me anticipating Christine Lagarde or Jean-Claude Trichet could shortly move into the captain’s chair in France. Perhaps the final maneuver would be the German Finance Minister Wolfgang Schaeuble’s supplanting Angela Merkel in Germany. Could you ever imagine Ben Bernanke as your president without an election to support the choice? It’s all quite baffling, though the intensifying desperation of Europe is adding impetus if not frenzy to these decisions. These latest government changes are explained as necessary to quell political posturing and to allow for unified effort. These implanted leaders are only seen as temporary fixes. Opposing parties view the next election as their opportunity to restore control. However, in the end, the people will decide who will lead them, and they would seem unlikely to punish these new technocrats, who are economic experts seemingly best qualified for the times. Who knows, this may even be a step toward a truly unified Europe.

FYI: In 2009, Wall Street Greek presciently wrote of the coming turnover of European and global governments.

Article is relevant to Deutsche Bank (NYSE: DB), Banco Santander (NYSE: STD), ITA (Nasdaq: ITUB), UBS (NYSE: UBS), Westpac Banking (NYSE: WBK), Lloyds Banking Group (NYSE: LYG), Barclays (NYSE: BCS), Credit Suisse (NYSE: CS), Allied Irish Bank (NYSE: AIB), Banco Latinamericano (NYSE: BLX), National Bank of Greece (NYSE: NBG), Royal Bank of Canada (NYSE: RY), BBVA Banco Frances (NYSE: BFR), The Bank of Ireland (NYSE: IRE), Bank of Montreal (NYSE: BMO), Canadian Imperial Bank of Commerce (NYSE: CM), ING Groep (NYSE: ING), Citigroup (NYSE: C).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.