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Let’s talk about the Greek issue.
More than enough ink has been spilled on this from the mainstream
financial media. However, I do think we there are a few key takeaways we
should note from this whole debacle.
1) Elements of the financial media is either unbelievably lazy
or completely complicit in helping to maintain the illusion of success for
the Centralized powers (large governments and Central Banks).
2) The political class and Central Banks are unable to resolve
debt issues in any meaningful way.
3) The real “bottom” or level of “price discovery” is far
lower than anyone expects due to the fact that the run up to 2008 was so rife
with accounting gimmicks and fraud.
Regarding #1, it is worth noting that the Greek Crisis actually first
started in 2009 when the country’s credit ratings were cut by all three
credit rating agencies: Moody’s, Standard and Poor’s, and Fitch.
The first actual request for a Greek bailout came in April 2010, over
five years ago. Since that time, Greece has received two formal
bailouts, its credit ratings have been dropped to “junk,” and its GDP has
collapsed over 20%: an amount roughly equal to the economic collapse
experienced by Argentina during its 2000-2001 crisis.
Throughout this entire process, the financial media media has run
thousands of articles proclaiming the Greece crisis was “over” or “fixed.”
Below is a spate of headlines from this period.
These are the more blatant headlines… however the entire five years period
was filled with claims that the debt issues were contained if not easily
fixable.
Usually the article featured an anonymous “official,” but as the below
article shows, even Finance Ministers were willing to go “on the record”
proclaiming that the EU had weathered the worst of the debt crisis storm:
The worst is over in the euro crisis, German Finance Minister
Wolfgang Schäuble said on Friday, praising Greece and expressing
confidence that France would master its problems.
Asked if the euro crisis would continue to worsen in 2013, Schäuble
told German daily Bild: "I think we have the worst behind us. Countries
like Greece have recognized that they can only overcome the crisis with hard
reforms. I hope the progress will continue. We are moving ahead step by
step."
http://www.spiegel.de/international/europe/german-finance-minister-schaeuble-says-worst-over-in-euro-crisis-a-874934.html
The above article is from December 2012.
Reviewing the above headlines (or thousands of others like them)… one is
reminded of what current EU President Jean-Claude Juncker once stated, “what
it becomes serious, you have to lie.”
Unfortunately for investors who use the news as a source of information to
guide their investment decisions, the financial media was an all-too willing
accomplice for the Central Banks and statist types. Which returns us to point
#1 in our list above:
1) Elements of the financial media are either unbelievably
lazy or completely complicit in helping to maintain the illusion of success for
the Centralized powers (large governments and Central Banks).
This has caused no shortage of harm to investors betting on Greece’s
recovery. Greece’s stock market lost 85% during the first round of its
financial crisis. The recovery rally peaked in 2014 right before it became
clear that the first bailout hadn’t solved much of anything. Since that time,
the Athens stock exchange has fallen another 52% with no indication of a
bottom.
What does this tell us?
That the debt issues which lead to the 2008 Crisis as well as the 2012 EU
Crisis have not been resolved. All the Central Banks have done is pave the
way for even bigger crisis… a crisis that will involve entire countries, not
just banks, going bankrupt.
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