Is Greece all sorted now?

wotsthat

Generali wrote: »

Finland has been saying for a few weeks that they are preparing for the possibility of Greece or others to leave the Euro or indeed for the Euro to break up entirely. They have also been very critical of countries that have suggested that it is daft to prepare for a possible break up, stating that not to prepare is to invite disaster should the possible happen.

I'm starting to feel sorry for the Greeks. No-one's going to invest in Greece when there's a real possibility that that Greek assets might be much cheaper in a few weeks. How do they exit anyway? I can't imagine there will be an announcement to tell everyone that their currency will be devaluing by about 40% on the 1st October. Maybe it'll be like being relegated from the Premier League and they get a parachute payment.

There's a fortune to be made - I just can't work out where.

pinkteapot

Generali wrote: »

Finland has been saying for a few weeks that they are preparing for the possibility of Greece or others to leave the Euro or indeed for the Euro to break up entirely. They have also been very critical of countries that have suggested that it is daft to prepare for a possible break up, stating that not to prepare is to invite disaster should the possible happen.

And they're absolutely right.

Of course, these other countries are all planning for it too. What they meant was "please don't tell everyone you're planning for it - 'smile and wave boys, smile and wave'".

Generali

wotsthat wrote: »

I'm starting to feel sorry for the Greeks. No-one's going to invest in Greece when there's a real possibility that that Greek assets might be much cheaper in a few weeks. How do they exit anyway? I can't imagine there will be an announcement to tell everyone that their currency will be devaluing by about 40% on the 1st October. Maybe it'll be like being relegated from the Premier League and they get a parachute payment.

There's a fortune to be made - I just can't work out where.

The trouble is, your counterparty risk is going to be immense if the Euro breaks up. Counterparty is a risk that you enter a deal and the other party goes bust or refuses to pay up if you make money.

The obvious positions are out of the money put and call options: if everything is magically sorted out then markets will soar, if everything goes horribly wrong then they will go sour. Out of the money long dated options are often pretty cheap and you can only lose what you spend unlike things like CFDs and futures if you buy for cash rather than on margin.

michaels

Problem is they keep upping the anti and playing the same card. Hence the noises from other contris about calling their bluff.

Question is does Europe have the balls for a Grexit? I'm thinking what better way to bring the others into line for a federal Europe than a Grexit, Greek destitution and an only just pulled off bank bailout. Tell European voters it is the federal way or all your savings are wiped out and we all end up like Greece.

So Generali how do we bet on a Greek exit plus a federal Europe?

Graham_Devon wrote: »

Greece's prime minister has just publically said again that Greece just "needs air" (and another baulout - my addition!) to get it sorted, and that a "Grexit" will be detrimental not only to Greece but the whole of Europe.

Generali

michaels wrote: »

Problem is they keep upping the anti and playing the same card. Hence the noises from other contris about calling their bluff.

Question is does Europe have the balls for a Grexit? I'm thinking what better way to bring the others into line for a federal Europe than a Grexit, Greek destitution and an only just pulled off bank bailout. Tell European voters it is the federal way or all your savings are wiped out and we all end up like Greece.

So Generali how do we bet on a Greek exit plus a federal Europe?

Short Greek Government bonds/Greek bank bonds via a put option (or CFD or future if you don't mind a larger possible downside) is a simple bet on Grexit. You have to use bonds as it's very hard to short Greek shares.

I suppose long EUR/GBP or EUR/CHF could be a proxy for European federation, it's a bit too indirect for my taste though. You could simply put on a bet with Betfair (they will open a market for you on demand at no cost). I guess long Italian or Spanish Government bonds could be a better proxy, short German bonds might be a counterintuitive bet and cheap too as you'll be on the other side of the trade for a huge amount of money. I reckon the latter is best on a risk/reward basis: a put option 5-10% below current market price will likely cost buttons. I'll look it up later. Lack of liquidity might be a killer though.

Graham_Devon

Apparently Greece could now stumble on for another year at least, as rumours from senior government sources in London have stated a deal has been done behind closed doors between Greece and Merkel etc.

The deal is in order to stop Greece slipping our of the Euro before Barrack Obama's elections in the US. A fallout in the Euro would derail his chances of re-election.

Treasury officials in London believe this will not be sorted before the German elections in September 2013, putting the world on hold and enforcing furter misery on struggling countries and it's citizens.

If a deal has been done, it's proof of just how corrupt this whole saga is.

Generali

Ok, so the closest product I can find is a put option on German Bond Futures.

German Bond Future Dec 2012 FGBL is trading at 142.20 (ask price). You can buy a put option on that at a price of 128 (i.e. a 10% fall in the price) at 3c/contract in theory (actually no trades have been struck so we don't know that is the price but that is what the exchange gives as the official price).

quantic

American officials are understood to be worried that if they decide Greece has not done enough to meet its deficit targets and withhold the money, it would automatically trigger Greece's exit from the eurozone weeks before the Presidential election on 6 November.

They are urging eurozone Governments to hold off from taking any drastic action before then – fearing that the resulting market destabilisation could damage President Obama's re-election prospects. European leaders are thought to be sympathetic to the lobbying fearing that, under pressure from his party in Congress, Mitt Romney would be a more isolationist president than Mr Obama.

Wonder how much truth there is to this...

nicko33

Graham_Devon wrote: »

The deal is in order to stop Greece slipping our of the Euro before Barrack Obama's elections in the US. A fallout in the Euro would derail his chances of re-election.

As if any of us should care about this (unless Obama's offering something in exchange)

Thrugelmir

quantic wrote: »

Wonder how much truth there is to this...

How many Americans do you think even know where Greece is?

Let alone have any interest in Europe.