I don’t know how many times I have to say this, but I’m saying it again.
Greece and the Euro are finished. The math is impossible. There is no way on earth that this Second Bailout accomplishes anything worthy of note. The idea that this country will somehow return to economic growth within two years, based on an additional €130billion in bailouts is outright insane.
Remember, Greece already received €110 billion in bailout funds in 2010… and still posted GDP growth of -4.5% in 2010 and -6.8% in 2011. Greece’s economy is only €227 billion, so the country failed to post any economic growth and in fact saw its economic collapse accelerate after receiving a bailout equal to 57% of its GDP!!!
And somehow another €130 billion is going to get this country back to economic growth in two years’ time? Greece hasn’t experienced any growth in five years.
Again, this entire deal is just stupid. And all it’s done is alert Spain and Italy to the fact that handing over fiscal sovereignty and implementing austerity measures in exchange for bailouts is a waste of time.
We didn’t write that. But we’re too lazy to say the same thing in our own words so we thank Phoenix Capital for saying it for us.
So as Greece apparently avoids another default – no wait, a disorderly default…a plain old default is okay – the market is already placing bets on the next one.
This ‘Greece is alright’ rally is a knee-jerk reaction. Our guess is that the market has topped out, at least for the time being. The panic sell-off earlier in the week is a sign of things to come. When a market grinds higher for weeks, then loses those gains in a matter of two days…well, it’s not a good sign.
Slipstream Trader and technical guru Murray Dawes thinks the same. If you haven’t already seen it, check out Murray’s latest (and last for a while) free stock market update on You Tube. He doesn’t like what he sees and thinks this market could head south in a hurry.
for The Daily Reckoning Australia