It’s a Deal

“Aha. As this evolves with the market, it looks like a deal has been reached. The Belgian Prime Minister tweeted not so long ago (around 08:40) that there was an agreement of sorts. Early signs are there, I wonder what the terms are?”


To market to market to buy a fat pig. As we suspected, it was all rather smart to promise this and that, when the “money moment” came, i.e. when Greek people reliant on the state did not get their money, that is when the hard liners started to be a little more meek. Germany, negotiating hard as the strongest economy inside of Europe has basically told the Greek delegation to go back to Athens and institute the reforms necessary, and then the rest of Europe can part with their money, to keep the countries banks afloat. And to pay civil servants. I am seeing that the Americans and there IMF are urging debt relief of sorts, remember that Greece has already had debt relief of 110 billion Euros.

Old pictures are resurfacing, of Greece being part of a delegation (South Africa too) in which the Germans were forgiven of certain debt, the London Debt Agreement. Wiki suggests that the last payment related to both wars (one and two) were made in 2010. So Germany did pay back a large portion of the money, even if they were forgiven of a large chunk. The difference is that the one was a war, the other was debt borrowing at lower rates never seen and too many benefits on the back of electioneering. Perhaps the previous dispensations were to “blame” for too many benefits, as simple human beings we never turn down a free lunch, do we? If someone promises X and you become used to it, it is very hard to now accept 0.6X. However if X was a number of many times better than in years gone by, nobody argues ever that anything is unsustainable. When the tide goes out, you can see who has been bathing without their trunks.

There really is just three days left. In short, as far as I can understand it, many are irritated that the same thing comes up over and over again and that their tax payer is on the hook for billions of Euros. That is the other side of the coin. If the politicians negotiating now agree to another round of debt relief it may be that the Greeks get what they want, it is about more than simple finances. It is about politics. This FT article: Greece’s eurozone future uncertain as Germany steps up pressure explains how German Finance Minister Wolfgang Schauble and ECB president Mario Draghi were at more than simple differences. The article describes how negotiations became heated to the point where they could be described as “violent”.

So that is the long and short of it all. Some folks are tired of all of this, it is impacting on them politically back home. That possibly counts for all people. I have seen interviews with ordinary Greeks and whilst I feel sorry for them, I have NOT seen interviews with ordinary German folk asking them what they think about Greece. The Greeks need more, the rest of Europe needs more. Being in Europe is awesome, having the freedom to go wherever you want and do business with whomever you want is pretty awesome and a great idea. I doubt that any country wants to return to capital markets by themselves, least of all the Greeks, who effectively have been shut out for the better part of half a decade.

This WSJ article explains almost perfectly how Tsipras and Syriza have overestimated their bargaining chips: Greek Debt Crisis: Germany Flexes Its Muscles in Talks With Bailout Ultimatum. Always remember that if it is someone else’s money then you need to act accordingly. You cannot tell the country to vote no and then go back with a begging bowl, this may well be that the German finance minister wants to punish Greece, at the end of the day the Greeks elected a bunch of left wing hardliners. Anti capitalists, Marxist Leninists, and the like make up the loose alliance that is Syriza, that is coming apart at the seams. At the end of the day I always think that it is rich to pass judgement here, in so much that we do not live Greek reality, we do not live German reality either.

There is still a lot of political will to get a deal done, of that I am sure. The only observation that I have and that was highlighted before is that there is a lack of trust, a huge one now. For now we wait for Greek politicians to decide whether or not this memorandum to commit and pass new laws in order to receive the money needed to stay afloat. They have until Wednesday, meanwhile the talks will continue. I am guessing that is the reason the old Greek finance minister, Yanis Varoufakis resigned. He didn’t get what he wanted. There has also been a suggestion that Greece takes a five year break from the Euro. I think that a deal will be done. In the meantime, expect more market volatility, sell first and then ask questions later.

Aha. As this evolves with the market, it looks like a deal has been reached. The Belgian Prime Minister tweeted not so long ago (around 08:40) that there was an agreement of sorts. Early signs are there, I wonder what the terms are? The EU president Donald Tusk tweeted the following:

So I guess the ball falls firmly in the Greek parliaments court. To use a tennis analogy. Tennis is amazing. Roger nearly made it a whole bunch of 30 year olds who won the lot, alas, my other favourite Djoko won, that mattered not for me. Markets are rallying across the board.


Company corner

There seems to be some confusion around the unbundling sale of South32. This happened when we elected that very option, electing to sell the shares rather than accepting them (the South32), when BHP Billiton unbundled them over a month ago. The average price achieved by the people managing the program (Goldman Sachs) was 1938.80 ZA cents. Current price of South32? 1625 ZA cents, you basically get a whole 355 cents more, which is a good outcome. Plus these sales were brokerage free, most importantly however, seeing as the percentage was so small, on a relative basis, it was the right thing to do. The value, at the higher sale amount, is roughly 8.1 percent of the current value of your BHP Billiton shares. That is good news.


Linkfest, lap it up

Do not ever give up. This is an inspirational story in the FT: Endurance-lit: long-running stories. Looks like a great book, “Two Hours: The Quest to Run the Impossible Marathon” to look forward to at the end of the week.

It is still not clear what consequences of re-fracking could be. It is clear though that re-fracking could push oil prices lower and keep them down for a long time. The most expensive past of extracting oil is in establishing a well, so if companies can reuse wells it will make extracting oil very cheap – Refracking Is the New Fracking. For companies like Tesla it could mean that people move toward electronic cars at a slower rate due to fuel costs staying down.

This is a great idea. Some golf courses can be damaging to the environment given the vast amount of water needed to keep them green, this is a way to make them ‘green’ for the environment – Japan is building solar energy plants on abandoned golf courses and the idea is spreading

Apple last quarter sold almost as many iPhones in the last quarter as there were total PC sales for the same quarter – The Death of the PC Has Not Been Greatly Exaggerated. The trend is clear where people are moving, which is good news the likes of Apple and less so for Microsoft.


Home again, home again, jiggety-jog. Good news as far as certainty with a last hour deal again, I suppose that the Greek vote at a parliamentary level is the only hurdle left. It is basically a yes or no to the Euro, I think.


Sent to you by the Vestacters, Sasha, Michael, Byron and Paul.

Email us

Follow Sasha, Byron and Michael on Twitter

087 985 0939

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s