Wednesday, February 8, 2012

Stocks Remain Sluggishly in Stall Mode Awaiting Greek Workout

Considering that there are nearly 7 billion people on Planet Earth, one wouldn't think that the economic fate of a country as small as Greece (population: 10,787,690 in the 2011 census) would rattle markets as much as the Hellenic nation has, but there's much more to the equation than just Greece and its populace.

If Greece is unable to come to terms with private and public financiers, and have their people agree to even more stringent austerity measures, there's the very real chance that Greece would formally default on its debt and thus be driven from the EuroZone. Ancillary to that argument is the suspicion that other derelict nations which use the Euro as their primary currency - countries such as Portugal, Spain, Italy, Belgium and Hungary - might also fall under the sway of separation from the Euro currency, a chain of events that would surely bring financial markets and whole economies to a state of panic and confusion.

So, while the unity party in Greece and Premier Lucas Papademos ponder their next moves, the world slowly turns.

Stocks were little changed for the third straight session in New York, treading water in a narrow trading range on a paucity of volume. However, if anything has been learned since the near-death experience of 2008, maybe the merry marketeers have discovered that slow is good.

Stocks have advanced at a snail's pace this week, with the Dow adding 19 points and change over the three days. Despite the angst over the situation in Europe, some are still finding equities worth buying and, yes, holding.

Should Greece formally default, it should not be the end of the world for US investors in particular. There's been plenty of time to decouple from Europe, though the effect of a cascading currency crisis would, almost certainly, have a deleterious aftermath.

On the opposite side of the equation is the hope-against-hope that the Greeks will accept austerity, private bondholders will take a 50-70% haircut and the troika will also manage to find a way to sweep the unpaid debts under the rug of international finance.

Since the ECB, IMF and our own Federal Reserve can just flip the money switch at will, there's little doubt that whatever the circumstances, and however dire the conditions for the people of Greece, the economic Ponzi scheme will continue without as much as a loud belch from the bowls of central bank vaults.

As it was in 2008 in America, little will change, although the though of visiting the home of the Acropolis and the Parthenon with American money at an exchange rate measured in cheap drachmas instead of overvalued Euros is rather appealing.

Dow 12,883.95, +5.75 (0.04%)
NASDAQ 2,915.86, +11.78 (0.41%)
S&P 500 1,349.96, +2.91 (0.22%)
NYSE Composite 8,083.47, +13.76 (0.17%)
NASDAQ Volume 1,952,598,125
NYSE Volume 4,050,664,250
Combined NYSE & NASDAQ Advance - Decline: 3218-2394
Combined NYSE & NASDAQ New highs - New lows: 279-11
WTI crude oil: 98.71, +0.30
Gold: 1,731.30, -17.10
Silver: 33.70, -0.49

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