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Greece Getting A Lot Worse, May Or May Not Get Better

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So, Greece: Not good. Greek Prime Minister Alexis Tsipras is being “defiant” once again, the headlines say, seemingly willing to play this game of chicken out with his foot firmly on the gas. The other side (Germany, basically) isn’t blinking, either, accusing the Greeks of “breaking all the rules.” Even the sort of left-leaning Germans who might be expected to show a little compassion have had enough.

There were also cautionary words for Greece from Sigmar Gabriel, the leader of the center-left Social Democrats, who are Ms. Merkel’s partners in government….

“Europe and Germany will not be blackmailed. And we will not let German workers and their families pay for the exaggerated election promises of a partly communist government.”

Fighting words that add up to who the hell knows?

Rabobank strategists wrote in a note on Monday that they’ve “always argued that a Greek deal would only occur at one minute to midnight” but that it now “looks like 23:58 and counting.”

Here’s Aberdeen Asset Management, which manages $490.8 billion, with three scenarios that could follow Thursday’s meeting….

Which scenarios are: The Greeks roll over, the Greeks default, or everyone tries to act reasonably. In other words, all possible options. Including this one:

As the bailout standoff between Athens and its creditors escalates, some European officials are suggesting something that was once unthinkable: Let Greece keep the euro currency even if it defaults on its rescue loans.

And this one:

Many economists think that a default would be followed by the European Central Bank’s suspension of its emergency lending to Greek banks. Fear of depositor flight would then force the Greek government into implementing its own capital controls.

And if it comes down to a Grexit? Don’t worry. Jim Cramer’s got you covered, and has two words to yell at you: “Rite Aid.”

“What does Greece have to do with Rite Aid the stock? The answer, sadly, is everything. I say sadly because it sure wasn't like this 30 years ago before we had futures," Cramer added….

"My conclusion? The irrational collateral damage to stocks that are unrelated to Greece but are pulled down in its vortex should be bought near the end of day two, after the debacle occurs, and then doubled down on day three," Cramer said.

That means if you want to buy 200 shares of Rite Aid—buy 100 on day two of the selloff, and 100 shares on day three. It couldn't hurt to wait to see if a Greek-induced sale happens. Otherwise, you have an opportunity to buy a good stock into weakness.

Greece will not present new reform proposals at Eurogroup: Bild [Reuters]
Greece: Three Scenarios As Drama Turns to ‘Absurdity’ [WSJ MoneyBeat blog]
Greece Prime Minister Alexis Tsipras Remains Defiant on Creditor Demands [WSJ]
Greece defiant; accused of ‘breaking all the rules’ [CNBC]
Europe Asks if Greece Could Default Without Exiting Euro [WSJ]
Maybe Greeks Shouldn’t Fear Capital Controls [WSJ MoneyBeat blog]
Europe Is Urged to Prepare for Greek Default as Stances Harden on Debt Deal [NYT]
Cramer: How to use a Grexit to your advantage [CNBC]


By Carole Raddato from FRANKFURT, Germany [CC BY-SA 2.0], via Wikimedia Commons

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