Playing Chicken
Research for Online Investors

8/6/12

Last week the “Troika” representatives said “We want to help (Greece) and will stay as long as is needed until you have prepared the package.”  The “package” was to be the completed package of tax increases, spending cuts and sale of government assets to meet commitments made by the Greek government early this year.

Once the Greek government passed this “package” into law, the troika representatives were prepared to return to Brussels “to draw up the assessment which will open the way to the disbursement of the loan installment.”

The troika representatives were supposed to leave last Tuesday, but extended their mission to help the Greek government complete the package.  That has all fallen apart now.  The troika representatives are leaving Athens empty handed.  No talk today of staying as long as it takes!  Poul Thomsen, the IMF representative, said “We made good progress.”  Bloomberg reports the Greek government’s statement agreed with the troika that the country needed ‘to strengthen policy efforts to support the economy and comply with its bailout terms.’

The troika representatives have now decided to leave Athens and will return in early September.  It looks like the same Greek intransigence is continuing. Promise whatever they demand, then drag your feet.  The problem is not the Germans, it is not Finland, and it is not the Netherlands.  The problem is Greece.

Italy and Spain are dangling in the wind.  Interest rates are staying high, but politicians want to wait longer to request aid.  They want the ECB to detail the plan outlined by Mario Draghi last week.

They know they need the help, they know interest rates are only going to go higher, but they want to game the ECB into the best deal they can make.  The problem is Spain and Italy, not the lending countries that demand conditions for a bailout.

The eurozone crisis will not end until the “children” learn to follow directions, cut entitlements, increase taxes, sell government assets and cut regulations so capitalism can sprout.  The wait continues as governments play ‘chicken’ with the ECB.

Ten armed militants launched an attack on Egypt yesterday with the intention of fomenting a conflict with Israel.  Sixteen Egyptian border guards were killed at the Egyptian run Rafah border crossing between the Sinai Peninsula and the Gaza Strip.  The gunman stole two armored vehicles, packed them with bombs and drove towards the Kerem Shalom border crossing between Egypt and Israel.

One vehicle’s bombs detonated in Egypt on the way to Kerem Shalom while the other one broke through a security fence close to the border crossing.  The Israeli air force destroyed it without incident.  All militants were believed killed but Israel asked citizens to stay in their homes while security forces checked for any that might have escaped.

Egypt strongly condemned the attack and President Mohamed Morsi said “Those who carried out this crime will pay dearly.  Clear orders have been given to our armed forces and police to chase and arrest those who carried out this assault on our children.  The forces will impose full control over this areas of the Sinai.”

The Debkafile hypothesizes the attack was mounted by surrogates for Iran directed out of Beirut.  Their intention was to discourage Egypt from helping Syrian anti-Assad fighters and to kidnap Israeli soldiers.

The market is continuing Friday’s rally today.  Frankly, we don’t see it.  Greece hasn’t met their conditions to receive another tranche of aid.  Spain and Italy are playing chicken with the ECB.  Resistance is at 1404 to 1410 on the S&P 500.  We could pop through it during the day but where do you go from there?

Editor’s note: Tomorrow is our primary election day.  We will happily exercise our franchise.  Our youngest daughter turned 18 years old this year and this is her first election.  She couldn’t believe how easy it was to register, just show the office workers your driver’s license.  How this becomes “voter suppression” I cannot understand.

Except one thing I have given some thought on.  You have to show your picture ID when you vote.  This keeps Johnny from voting as Bobby.  The shrill voices in the media (and Attorney General’s office) tell us this will keep people from voting.  Maybe it will.  Maybe the dead ones and the ones who voted as someone else in Florida will be “disenfranchised.”  If so…good.

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