Joe Wiesenthal in Athens

Joe Wiesenthal is the famously workaholic financial journalist / Deputy Editor at Henry Blodget''s BusinessInsider.com. http://www.nytimes.com/2012/05/13/magazine/joe-weisenthal-vs-the-24-hour-news-cycle.html?pagewanted=all

Joe Weisenthal wakes up around 4 a.m. most weekdays, afraid that in the five or six hours he has been sleeping, something happened that could move financial markets. His alarm is his cellphone, and after he silences it so that his wife can sleep, he rolls from bed and starts to type, still in his pajamas, in the darkness of his apartment at the edge of the Financial District. And the first thing he types, the first of about 150 daily messages he posts on Twitter, is almost always this: “What’d I miss?”

A few days ago, he went to Athens to get a first hand view of the financial drama and presumably not have a second delay in reporting the elections, the crisis and the possible collapse.      Fair enough.

But a few days into Athens, there are some uncharacteristic postings starting to emerge:

"Athens-in-crisis:  Well, it is actually pretty sweet - we are chilling by the pool and the view is fantastic!"

http://www.businessinsider.com/what-athens-is-like-right-now-2012-6

"Athens-in-Crisis - Boy, the Acropolis is pretty nice, huh"

http://www.businessinsider.com/the-acropolis-2012-6

"Athens-in-Crisis - it is time for a "Frappe""

http://www.businessinsider.com/rusfeti-and-haratsi-2012-6

"Athens-in-Crisis - We just won our Euro match and I am partying on a motorcycle"

https://twitter.com/TheStalwart/status/214105389778735104/photo/1

Given that I split my time between Manhattan and Cyprus, I know this drill 100%

I think as of now, we have to score this as:

Mediterranean Sun: 1 vs. The Workaholic 24 Hour News Cycle: 0

Careful Henry - if you let him stay too long, you might never get him back!

The Euro - The Impossible & The Improbable

How often have I said to you that when you have eliminated the impossible, whatever remains, however improbable, must be the truth? - Sherlock Holmes

Things that are impossible:

• Greece can austerity-its-way-out of a debt to GDP ratio of 160%

  At the beginning of the crisis, Greece had a debt to GDP of 110% (10% lower than Italy today, albeit with a high fiscal deficit).    After 4 years of austerity and a massive debt write-off, the debt is up to 160%.

  When a sovereign has high debt to GDP, the answer is to inflate, not deflate.   Because, using simple math, when you start having both the numerator (debt) and the denominator (GDP) go in unhelpful directions, it is almost impossible to get out from under a large debt load.

  So far, the history of the various agreements between EU and Greece on austerity is that the EU/IMF pretend the economics models will work and the Greeks pretend they will implement them.    And everyone kicks the can down the road.

• The Eurozone in its current form can eject Greece and prevent "contagion"

  Large parts of the Eurozone are suffering from this delusion.   Once a member leaves the Euro, it becomes clear that the Euro is not a currency union, but a hopelessly rigid series of currency pegs.    Currency pegs, famously, break all the time.    You will have immediate and massive pressure on the next country - in financial markets, from fleeing depositors, from businesses pulling investment.    And you wipe out the benefits of a currency union permanently, particularly around reducing cross-border currency/redenomination risk.   The EU has already done massive damage to itself in this regard.   If they let Greece go, it will get much worse.

  Just like nobody enjoyed getting paid back their Euros in drachmas, nobody rational is going to wait around to see if they will get back lira, pesetas or escudos in exchange for their Euros.    This triggers a self-fulfilling bank, investment and credit run.

Once you accept the following, then one of these three scenarios become the outcome, however improbable they might seem:

1. Renegotiation:  Europe will in fact renegotiate the Greek memorandum, if Greece ever puts together a government, and continue to 'extend and pretend'.
2. Collapse:  Greece will leave the Euro.    In a few weeks or months, another member will go - Portugal or Spain most likely.    Once Italy starts to go, the Germans lose their nerve, realize they can't rescue the whole Eurozone and let it fall apart
3. Integration:  The Eurozone, in some manner or another, decides to mutualize debts.   Given that the largest debtor in the EU is Italy and it, at this stage, is almost over the edge, this means the burden will fall very heavily on Germany.   This is going to take a level of domestic diplomacy in excess of what we have seen from Merkel to date.   We will discuss this more in further posts.

   There is a sub-plot here which is whether or not integration happens with or without Greece.    Germany seems to have given up on Greece and seems to be counting on managing a Greek exit, followed by further integration.    This strikes me as extremely risky living.    Given the huge coordination costs in Europe, I think this pathway has a 50:50 chance of ending in collapse as events get ahead of EU policymakers' ability to move quickly enough

These three outcomes are the only outcomes to Euro crisis:  Either Greece is going to get a renegotiated package, or the Germans will pony up to pay for the whole Med region or the whole Eurozone will fall apart.

Football, Greece & the Euro

So two big items this weekend:   The Greek match against Russia where Russia was heavily favored to wipe them out of the Euro 2012 and the now, infamous Greek elections - v2.

Greece somehow channeled the Greece of 2004 and won 1-0

http://www.guardian.co.uk/football/2012/jun/16/euro-2012-greece-russia-live

This was the setup from the Guardian

Good evening. It has been said on more than one occasion this week that the moment of truth for Greece is fast approaching. This viewpoint has generally been carried in the so-called "serious pages" and relates to what is believed to be the more important matter of the re-run of the Greek general election. But the fact of the matter is that twice in the next 24 hours the Greeks will put their necks on the line with a place in the Euros at stake.

Escaping the pincer jaws of austerity may be slightly harder than grinding out a 1-0 win over a Russia side who, for the most part, have impressed in this tournament, but there is no outcome in Sunday's election that will lift the spirits of the people quite like victory in Warsaw.

The signs don't look good for Greece. A quick pilfering of the work of the good folks at Opta reveals that they have had the fewest shots on goal of any team in Euro 2012 so far (three) and they have only won one of their 11 group stage games the European Championships – that was the opening match of their triumphant 2004 campaign against Portugal. In fact this is the third successive European Championships that Greece have played Russia and they have lost the previous two. But win they must – it's as simple as that.

And the outcome, again from the Guardian

Full Time: Greece 1-0 Russia. Greece go through to the last eight. Russia are out. That is astonishing. Truly astonishing.

They played like the 2004 team - the most improbable winner of any major football tournament ever...

http://www.zonalmarking.net/2010/03/29/greece-euro-2004-tactics/

This Greek side achieved perhaps the most astonishing thing in the history of international football. There have been one-off shocks, games that went against the favourites because of a particular set of circumstances. USA 1-0 England in 1950. Senegal 1-0 France in 2002. But those things can happen; shocks in football happen because it’s such a low-scoring game, and dominance doesn’t always equal goals.

But never before has a team so unfancied gone onto win a major international tournament. Available at odds of up to 250/1 and having never won a tournament game in their history, Greece’s march to wining Euro 2004 was unquestionably the tactical achievement of the decade. 

And, for ultimate irony, their likely opponent in the quarterfinals will be Germany.

This will definitely lighten the mood in Greece for tonight -- I wonder if it will actually impact election results

Galis European Championship vs. Russia, 1987

The most common response to my mega Greece basketball post was: "I didn't know about this Galis guy" Youtube to the rescue with a highlight reel of the 1987 European Championship.

It starts off slow and the editing is all cheese, but check out: 2:37, 2:53, 4:42, the latter two being totally ridiculous for a guy his size. (and at 1:37, you also see the current Greek coach and Galis's teammate, Giannakis).

[youtube=http://www.youtube.com/watch?v=93qc8EzsohM&hl=en&fs=1]