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Thursday, April 22, 2010

Tic Tac Encore !

I hear every so often lately people asking me: "Should I buy Greek bonds?" , "They're cheap..." , "Default is unlikely..." etc etc.

The truth is, more than a year ago I said the next crisis would become evident on sovereign debt. At the time, you couldn't find anything on the media. 4-5 months ago, Greece wasn't even a topic of conversation. Once the debt problems escalated to the public knowledge the greek Prime-Minister came to public staying that Greece didn't have any problems. They had it under control and wouldn't need help from either EU or IMF.

4 months later he is quiet as a mouse. This after a scandal of crooked accounts by the Finances department of the country in order to hide the real numbers from EU.

Now Greece looks to be the hot topic for every John Smith around the world, like suddenly they are top experts. I see a lot of retail public saying they want to buy Greek bonds. This has been on the past 2 weeks where yields at the time were under 7%, and of course we know how the public is wrong most of the times.

Yields don't stop escalating. They are now on the 8.6% area... An intervention will have to take place sometime, probably it will be during the weekend in a concerted effort by the EU and IMF most likely to bailout Greece this weekend.

Portugal, oh well, we're pretty much in the same boat no matter what people in newspaper say, whatever the portuguese Finance Minister says - the guy is either lying or is ignorant - if this keeps going we Portuguese will have to endure some real problems ahead. The PEC is a joke, there were no significant cuts announced, just higher revenue coming from higher taxes (which will strangulate the economy even more) and by the sale of assets, which as most of you know is not recurrent thing, so once the jewels are out, what are they gonna do?

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