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#1
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Communism is alive and well in Greece
http://online.wsj.com/article/SB1000...434882588.html
Look at the picture, if it is behind the paywall, see here http://igor.chudov.com/tmp/greece-communists.jpg In the interests of disclosure, I must say that I bought a Greek stock in the last few days. It is called "Hellenic Telecom" (OTE). I reasoned that even communists or unemployed people want to use phones and Internet. i |
#2
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Communism is alive and well in Greece
Ignoramus32324 wrote:
http://online.wsj.com/article/SB1000...434882588.html Look at the picture, if it is behind the paywall, see here http://igor.chudov.com/tmp/greece-communists.jpg In the interests of disclosure, I must say that I bought a Greek stock in the last few days. It is called "Hellenic Telecom" (OTE). I reasoned that even communists or unemployed people want to use phones and Internet. How do you think the deflationary cycle that Greece, Spain, Poland and a couple of others will impact your investment? Greece, for instance, can no longer just devalue their currency the way they could before joining the EU so they are going to have to reduce wages as a nation. Spain is even worse. -- John R. Carroll |
#3
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Communism is alive and well in Greece
On 2010-05-05, John R. Carroll wrote:
Ignoramus32324 wrote: http://online.wsj.com/article/SB1000...434882588.html Look at the picture, if it is behind the paywall, see here http://igor.chudov.com/tmp/greece-communists.jpg In the interests of disclosure, I must say that I bought a Greek stock in the last few days. It is called "Hellenic Telecom" (OTE). I reasoned that even communists or unemployed people want to use phones and Internet. How do you think the deflationary cycle that Greece, Spain, Poland and a couple of others will impact your investment? Given that they are in the euro zone, the prices are not local and thus I do not expect to see local deflation. As to a more general question, how will this phone/internet provider do in a recession, I would hypothesize, that people might use the phone a little bit less? Maybe use a little bit less instant messages? Greece, for instance, can no longer just devalue their currency the way they could before joining the EU so they are going to have to reduce wages as a nation. Spain is even worse. They have to increase taxes and reduce govt benefits. In any case, I expect Greeks to still use phones and the Internet. i |
#4
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Communism is alive and well in Greece
On Tue, 04 May 2010 22:08:42 -0500, Ignoramus32324
wrote: http://online.wsj.com/article/SB1000...434882588.html Look at the picture, if it is behind the paywall, see here http://igor.chudov.com/tmp/greece-communists.jpg In the interests of disclosure, I must say that I bought a Greek stock in the last few days. It is called "Hellenic Telecom" (OTE). I reasoned that even communists or unemployed people want to use phones and Internet. i ============= Might be a good play at the right price, however there is considerable merit in the argument that what the Greek worker and peasant pays for, the Greek worker and peasant should own. According to the history books, one of the most popular propaganda catch-phrases in the Russian revolution was "steal that which was stolen." The Greek governmental credit crisis has even attracted the attention of my Representative in Congress. The huge danger is that this is not isolated to Greece but Greece is simply the first card to fall in the collapse of the house of cards that is international finance. If you are interested you can see Rep. Tiahrt's thoughts on US taxpayer involvement in the Greek finance/fiscal debacle at http://tiahrt.house.gov/index.cfm?se...&itemi d=1517 As is my habit, I wrote him an email, with CCs to my Senators, a copy of which is below. ----- start of email ----- To: Representative Tiahrt CC: Senator Brownback Senator Roberts Representative Moran Congratulations on being proactive rather than reactive to the Greek/Euro financial/fiscal crisis as indicated in your web posting of 04 May titled "Tiahrt: No Taxpayer-Funded Bailouts for Greece". Keep up the good work!!! A few items of caution and observation: (1) Based on the prior precedent of the Mexican bail-out shortly after the ratification of the NAFTA treaty using funds from the "(emergency) Economic Stabilization Fund" now known as the "Exchange Stabilization Fund" IT MAY ALREADY BE TOO LATE in that the money has been appropriated and is now under administrative/bureaucratic rather than Congressional control. http://en.wikipedia.org/wiki/Exchang...ilization_Fund snip The U.S. government used the fund to provide $20 billion in currency swaps and loan guarantees to Mexico following the 1994 economic crisis in Mexico. This was somewhat controversial at the time, because President Clinton had tried and failed to pass the Mexican Stabilization Act through Congress. Use of the ESF circumvented the need for approval of the legislative branch. In response, Congress passed and President Clinton signed the Mexican Debt Disclosure Act of 1995, which implicitly accepted the use of the ESF, but required reports to Congress every six months on the status of the loans. At the end of the crisis, the U.S. actually made a $500 million profit on the loans. On September 19, 2008, U.S. Treasury Department announced that up to $50 billion in the ESF would temporarily be made available to guarantee deposits in certain money market funds. snip (2) It is a typical but unfortunate misuse of language to refer to the emergency loans as a rescue of Greece. Neither the Greek people nor the Greek state will be helped in anyway by the huge IMF/ECB loans. Indeed, under the proposed /ECB austerity measures the average Greek looses a great deal. The government of Greece, and the banks of Greece will gain a small amount of time and breathing room, but as this is directly a solvency problem, not a cash flow problem, i.e. the government of Greece is bankrupt; any benefits will be short term, at most a respite of few months. The big winners/gainers will be the creditors of Greece, the international banks that bought the Greek paper, aiding and abetting the purchase of excessive armaments and "show case" projects of marginal and frequently negative value to the Greek people and state. Items with at least potential payback such as infrastructure upgrade, for example railroad and port improvement were neglected. It should be noted that unless done with exceptional care and finesse, "austerity" can, and frequently does, trigger deflation/depression, making the fiscal/economic problems worse, not better. (3) While the major U.S. banks have loudly/proudly proclaimed their lack of investment in Greek governmental bonds, this may well be a hollow boast. While it may be factual to state they hold no Greek governmental paper, no information about other exposure such as derivative counter-party risk (which can be many times the face or notational value of the bonds), for example Credit Default Swap or Interest Rate Swap contracts has been forthcoming, and while there may indeed be no *DIRECT* bank exposure to Greek governmental default/rescheduling, they may nevertheless be heavily exposed, for example through the bank's "carry trade" customers such as speculators, hedge fund, bond funds, etc., particularly given the extraordinary interest returns possible because of the fall in short-term bond prices (note the inverted yield curve). http://www.bondsquawk.com/tag/greek-bonds/ snip The yield on 2-Year Greek bonds moved higher by 354 basis points to 13.82 percent while the 5-year is yielding 11.58 percent, a rise of 121 basis points. The yield on Greek 10-Year is trading higher by 90 basis points to 9.40 percent. snip ----- end of email ----- -- -- Unka George (George McDuffee) ............................... The past is a foreign country; they do things differently there. L. P. Hartley (1895-1972), British author. The Go-Between, Prologue (1953). |
#5
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Communism is alive and well in Greece
On 2010-05-05, F George McDuffee wrote:
Might be a good play at the right price, however there is 5 times annual earnings, 9-10% dividend yield, 31% return on equity, dominant market position. The minus is 4:1 leverage, but many utilities use leverage. As for your representative wanting to deny bailouts because "taxpayers are tired of bailouts", it needs to be pointed out that some taxpayers are tired of them and some were saved by them. It would seem that Greece is mostly a European concern at this point. However, if a crisis of confidence is allowed to propagate too far, it may affect the United States as well. If irrational fears result in tripling of our debt service costs, suddenly that amount will be a reality of its own. It is something to keep in mind. This is a complicated matter in which I have no opinion on whetehr to help Greece or not. My judgment regarding OTE is that it will probably do well. i |
#6
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Communism is alive and well in Greece
Ignoramus32324 wrote:
On 2010-05-05, John R. Carroll wrote: Ignoramus32324 wrote: http://online.wsj.com/article/SB1000...434882588.html Look at the picture, if it is behind the paywall, see here http://igor.chudov.com/tmp/greece-communists.jpg In the interests of disclosure, I must say that I bought a Greek stock in the last few days. It is called "Hellenic Telecom" (OTE). I reasoned that even communists or unemployed people want to use phones and Internet. How do you think the deflationary cycle that Greece, Spain, Poland and a couple of others will impact your investment? Given that they are in the euro zone, the prices are not local and thus I do not expect to see local deflation. As to a more general question, how will this phone/internet provider do in a recession, I would hypothesize, that people might use the phone a little bit less? Maybe use a little bit less instant messages? Greece, for instance, can no longer just devalue their currency the way they could before joining the EU so they are going to have to reduce wages as a nation. Spain is even worse. They have to increase taxes and reduce govt benefits. In any case, I expect Greeks to still use phones and the Internet. OK. What that means, since their currency can't float, is that the peeps will have much less disposable income for things like satellite TV and cell phones and as unemployment rises wages will be under tremendous pressure. Then when their Romanian holdings crater and the Greek Government's subsidies are reduced or eliminated, I'd expect to see the equity value adversly affected. There are way too many unknowns in the world today so I'm with the guys that wouldn't know which way to go on this one but I wouldn't be surprised to see share prices on their ADR's in the three dollar range or even lower within the next year. As George indicated - they might just be nationalized. DT might very well end up with the entire company, which would be great in the long run, but you will have to stay the course and the deal might end up as an equity swap with a little cash. That they just increased their position indicates their belief that nationalization isn't likely. -- John R. Carroll |
#7
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Communism is alive and well in Greece
Ignoramus32324 wrote:
On 2010-05-05, F George McDuffee wrote: Might be a good play at the right price, however there is 5 times annual earnings, 9-10% dividend yield, 31% return on equity, dominant market position. The minus is 4:1 leverage, but many utilities use leverage. The minus is their P/E ratio Ig. For one thing, it's way too low even for a utility. Their last dividend was EU .5 per share. Something is goofy about these numbers. The question, of course, is what exactly that is. Infrastructure? I'm just seeing the boogie man everywhere these days. My feeling isn't so much driven by debt as it is that by "saving" the financial sector we have prevented the collapse of 1929 but what we end up with might not be so good either. Greater income disparity appears to be the future and that isn't good for anyone in the long run. -- John R. Carroll |
#8
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Communism is alive and well in Greece
On 2010-05-05, John R. Carroll wrote:
Ignoramus32324 wrote: On 2010-05-05, John R. Carroll wrote: Ignoramus32324 wrote: http://online.wsj.com/article/SB1000...434882588.html Look at the picture, if it is behind the paywall, see here http://igor.chudov.com/tmp/greece-communists.jpg In the interests of disclosure, I must say that I bought a Greek stock in the last few days. It is called "Hellenic Telecom" (OTE). I reasoned that even communists or unemployed people want to use phones and Internet. How do you think the deflationary cycle that Greece, Spain, Poland and a couple of others will impact your investment? Given that they are in the euro zone, the prices are not local and thus I do not expect to see local deflation. As to a more general question, how will this phone/internet provider do in a recession, I would hypothesize, that people might use the phone a little bit less? Maybe use a little bit less instant messages? Greece, for instance, can no longer just devalue their currency the way they could before joining the EU so they are going to have to reduce wages as a nation. Spain is even worse. They have to increase taxes and reduce govt benefits. In any case, I expect Greeks to still use phones and the Internet. OK. What that means, since their currency can't float, is that the peeps will have much less disposable income for things like satellite TV and cell phones and as unemployment rises wages will be under tremendous pressure. Then when their Romanian holdings crater and the Greek Government's subsidies are reduced or eliminated, I'd expect to see the equity value adversly affected. There are way too many unknowns in the world today so I'm with the guys that wouldn't know which way to go on this one but I wouldn't be surprised to see share prices on their ADR's in the three dollar range or even lower within the next year. As George indicated - they might just be nationalized. DT might very well end up with the entire company, which would be great in the long run, but you will have to stay the course and the deal might end up as an equity swap with a little cash. That they just increased their position indicates their belief that nationalization isn't likely. I also do not expect nationalization. Hellenic Telecom is not a TV company, as much as it is a phone and internet provider company, like BellSouth. I would not expect people to give up either, except in very dire circumstances (perhaps I am projecting). Participation of DT is an encouraging factor for me. I have no idea how low OTE will go, but I do think that chances are tilted in my favor. My son is now reading a "investing for kids" book. He asked me about risk. This is a topic where I can go on a huge tirade if I am not restrained. What such books usually do not explain, is that risk is mostly about how much you pay for something. Risk is a possibility of overpaying for a "dog" asset, not volatility. I asked him, imagine that you buy an industrial machine, in unknown condition. If the machine is bad, you can sell it for $200, if the machine is good, you can sell it for $1,000. I asked, do you think that it is a risky purchase? He said, yes. My next question was, what if I paid only $100 for the machine, is that a risky purchase? Then a light bulb lit in him and he said, not at all. Buying viable businesses in a distressed country awash in bad news, is like buying an unknown condition metalworking machine for less than scrap value. At a price like that, all surprises with the machine will be good surprises. I may lose money, still, but I estimate chances to be in my favor. i |
#9
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Communism is alive and well in Greece
On 2010-05-05, John R. Carroll wrote:
Ignoramus32324 wrote: On 2010-05-05, F George McDuffee wrote: Might be a good play at the right price, however there is 5 times annual earnings, 9-10% dividend yield, 31% return on equity, dominant market position. The minus is 4:1 leverage, but many utilities use leverage. The minus is their P/E ratio Ig. For one thing, it's way too low even for a utility. Their last dividend was EU .5 per share. Something is goofy about these numbers. The question, of course, is what exactly that is. Infrastructure? I think that it is like BellSouth, kind of. I'm just seeing the boogie man everywhere these days. Not a bad way as a start to all analysis. My feeling isn't so much driven by debt as it is that by "saving" the financial sector we have prevented the collapse of 1929 but what we end up with might not be so good either. Greater income disparity appears to be the future and that isn't good for anyone in the long run. You are right. It is not even good on the correct side of the income divide. (where one would hope to be) I would prefer to be well off, surrounded by other well off people, than to be well off in a sea of poverty, confusion and despair. The income disparity, however, is driven by economic factors from which there is no escape. These factors are computers and automation. The phenomenon is called variously, for example "loss of middle class jobs". (or midmarket) This article is frightening: http://www.ncbi.nlm.nih.gov/bookshel...013e48ddd00012 It identifies the "competencies" related to complex problem solving, which will continue to be rewarded, with the implication that there will be less and less space for people not possessing them. i |
#10
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Communism is alive and well in Greece
Ignoramus22564 wrote:
On 2010-05-05, John R. Carroll wrote: Ignoramus32324 wrote: On 2010-05-05, F George McDuffee wrote: You are right. It is not even good on the correct side of the income divide. (where one would hope to be) I would prefer to be well off, surrounded by other well off people, than to be well off in a sea of poverty, confusion and despair. My immediate concern is that the worlds biggest central banks have fundamentally changed the character of their balance sheets. The US Fed, for example, has expanded their balance sheet from $800 billion when the latest turmoil started all the way to $3.5 trillion dollars and the mix has gone from 95/5 US T-Bills to an unhealthy blend of securities that aren't investment grade at all in some cases. Furthermore, they have actually put out (created) $15 trillion dollars all together. The only way you can have a $3.5 trillion dollar balance sheet in a $15 trillion dollar environment is with off balance sheet assets. The US central bank, in other words, is running the same model AIG, Lehman, BofA, and WAMU were and we know where that lead. Should this become widely percieved as the truth, underlying value won't matter at all and the risk premium for anything will be 100 percent. The income disparity, however, is driven by economic factors from which there is no escape. These factors are computers and automation. The phenomenon is called variously, for example "loss of middle class jobs". (or midmarket) This article is frightening: http://www.ncbi.nlm.nih.gov/bookshel...013e48ddd00012 It identifies the "competencies" related to complex problem solving, which will continue to be rewarded, with the implication that there will be less and less space for people not possessing them. The "middle" will continue to be squeezed and we will end up, as the article points out, with a barbell shaped structure. One thing that wasn't explicitly stated is that the barbell won't be equally weighted. One side weighs 90K employment units and the other 10K. This isn't good or even necessary. In a consumer based economy, you'd want an elliptical distribution. The US isn't adopting the public policy posture required to insure this - just the opposite. -- John R. Carroll |
#11
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Communism is alive and well in Greece
Ignoramus22564 wrote:
On 2010-05-05, John R. Carroll wrote: Ignoramus32324 wrote: On 2010-05-05, John R. Carroll wrote: Ignoramus32324 wrote: Participation of DT is an encouraging factor for me. I have no idea how low OTE will go, but I do think that chances are tilted in my favor. I do too but not for any reason beyond DT's increase in their position. My son is now reading a "investing for kids" book. He asked me about risk. This is a topic where I can go on a huge tirade if I am not restrained. What such books usually do not explain, is that risk is mostly about how much you pay for something. Risk is a possibility of overpaying for a "dog" asset, not volatility. I watched Blankfein on Charlie Rose recently. Did you see it? Every time the discussion turned to market making, Blankfein spoke about his customers buying and selling risk. I don't think he mentioned anything physical even once. I lost a lot of respect for Rose because of this interview. He appeared to want to ask about the abuse a market maker can inflict but never went beyond allowing the response to be another attempt to restate what making a market means. Rose is either dumb or he had agreed not to ask certain direct questions as a condition of getting the interview. I asked him, imagine that you buy an industrial machine, in unknown condition. If the machine is bad, you can sell it for $200, if the machine is good, you can sell it for $1,000. I asked, do you think that it is a risky purchase? He said, yes. My next question was, what if I paid only $100 for the machine, is that a risky purchase? Then a light bulb lit in him and he said, not at all. Well, there is one risk and that is that the market for whatever the asset is won't exist when you want to sell. That's what happened to the derivatives market. Then third party repo failed. I still can't believe how large the TED spread got. Buying viable businesses in a distressed country awash in bad news, is like buying an unknown condition metalworking machine for less than scrap value. At a price like that, all surprises with the machine will be good surprises. I may lose money, still, but I estimate chances to be in my favor. The only drawback is a lack of specific knowledge not about the company or industry but about what k00kie thing people might do in reaction to what's happening in the general economy. You can't, for instance, factor in mass suicide! LOL I've never bought equity in the absence of specific positive knowledge in advance of the market. I also set my trigger prices in advance at both the low and high side. -- John R. Carroll |
#12
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Communism is alive and well in Greece
On Tue, 04 May 2010 23:29:58 -0500, F. George McDuffee
wrote: snip Congratulations on being proactive rather than reactive to the Greek/Euro financial/fiscal crisis as indicated in your web posting of 04 May titled "Tiahrt: No Taxpayer-Funded Bailouts for Greece". Keep up the good work!!! A few items of caution and observation: (1) Based on the prior precedent of the Mexican bail-out shortly after the ratification of the NAFTA treaty using funds from the "(emergency) Economic Stabilization Fund" now known as the "Exchange Stabilization Fund" IT MAY ALREADY BE TOO LATE in that the money has been appropriated and is now under administrative/bureaucratic rather than Congressional control. http://en.wikipedia.org/wiki/Exchang...ilization_Fund snip ========== Without editorial comment except to note that this was released late on Sunday night [May 09] http://news.yahoo.com/s/ap/20100510/...na/date/asc/11 snip WASHINGTON – The Federal Reserve late Sunday opened a program to ship U.S. dollars to Europe in a move to head off a broader financial crisis on the continent. snip prevent the European crisis from spreading further. The Fed said action is being taken "in response to the reemergence of strains in U.S. dollar short-term funding markets in Europe," and to prevent the spread of that strain to other markets and financial centers. A so-called "swap" line with the Bank of Canada provides up to $30 billion. Figures weren't provided for the other central banks. The arrangements are authorized through January 2011. snip -- -- Unka George (George McDuffee) ............................... The past is a foreign country; they do things differently there. L. P. Hartley (1895-1972), British author. The Go-Between, Prologue (1953). |
#13
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Communism is alive and well in Greece
Wow, I was welding and drilling etc, playing with kids almost all day
yesterday and missed the "1.2 trillion stabilization". |
#14
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Communism is alive and well in Greece
Special for John Carroll and others that are interested in
the economy. Note metal content. http://www.telegraph.co.uk/finance/p...and-bonds.html The New York University professor, Nassim Taleb, who made his name predicting the credit crunch, has told investors to dump equities and government bonds and buy 'hard assets'. By James Phillips, citywire.co.uk Published: 10:55PM BST 18 May 2010 snip The New York University professor, Nassim Taleb, who made his name predicting the credit crunch, has told investors to dump equities and government bonds and buy 'hard assets'. He has poured scorn on the economic recovery, claiming that the global economy is in worse shape than it was during the subprime crisis and warns that the US could yet lurch into a Greek-style meltdown. snip His main concern is that the transferal of debt from the private to the public sector has seen the risks within the financial system increase and 'take a much more vicious form.' Western governments have been issuing record levels of debt to keep the recovery afloat, but Taleb says that it is inevitable that at some point they will struggle to find buyers of these assets. snip So how should investors position their portfolios for such a doomsday scenario? Taleb, who made millions betting against financials during the credit crunch, recommends investors dump long-term government bonds and only hold short-dated debt. He also warns against viewing the dollar as a hedge against the ailing euro, pointing out that both currencies face the same underlying problems. He dismisses the stockmarket, which would be expected to perform badly in a period of hyperinflation, completely, "I recommend not thinking about the stockmarket," he said. "It is a big hoax that has disappointed people over the last decade making their retirement plans, thinking it would appreciate." "Use it as something to play with for entertainment and nothing more." He favours moving into hard assets and advises investors to build exposure to a basket of metals rather than try and second guess which individual hard commodity will outperform. He also likes agricultural land, but said avoid 'speculative real estate'. snip -- Unka George (George McDuffee) ............................... The past is a foreign country; they do things differently there. L. P. Hartley (1895-1972), British author. The Go-Between, Prologue (1953). |
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