Short Selling the Greek Euro

Continuing my thoughts from a previous article, The Greek Financial Sodoku, concerning the new economic austerity measures about to be announced to the Greek people, I want to include that most of the people don't have an idea of what is entailed in not only announcing or introducing economic measures, but most importantly implementing them. It may come as a surprise to distinguish the implementation stage of a measure, from the introduction stage; but I am making this distinction since most, if not all, laws, regulations, measures or policies in Greece are not implemented or are misinterpreted to be biased in favoring certain people over the general population. In short, most of the laws or policies are not implemented. If they were implemented Greece would not be in this financial situation. So, I do not believe that this time around the measures will be successful. Greece will buy some time with the Europeans, and then the country will face an awkward situation in implementing these measures to the Greek economy. It will be a total failure.

For the time being short selling the Greek economy can be proven to be a very wise decision. The Athens Stock Exchange has increased the stock lending interest rate from 2.5 per cent to 5.5 per cent and adjusted margin requirements. A comment in an FT article is very interesting:

It's becoming a joke though if as soon as markets decline due to people finally realising their true value, policymakers jump in and try and stop it, blaming short sellers! There are lots of studies/papers showing future returns are negatively affected by increasing short selling costs.

Warren Buffet said it best: "When people are greedy, it's time to be fearful; when people are fearful, it's time to be greedy". Greek people have beed fearful and will continue to be because they keep on proposing government led solutions and state policy interventions, to face economic problems. Sort Sell the Greek economy, because most of the current business structures are about to get a major overhaul.

Greece will face even more reactions to the austerity measures due to be implemented, not from the Europeans, or the International financial community, but from the Greek people; scenes like these from a recent rally in the streets of Athens will become a daily occurrence.