The Euro, the Greek debt crisis and exaggerations

So much for the Euro and Greek crisis… It looked like the issue was exaggerated and here’s some news about a hedge fund dinner where the idea of shorting the Euro came up: http://www.reuters.com/article/idCNN2515219020100226).  It’s not that there’s no need for serious restructuring in the EU mechanisms, in the economy of Greece and of the other PIIGS but for sure problems were exaggerated as always when there’s unwillingness or inability to counter worrisome voices and room to profit for that. 

It now looks like the Greek crisis is settling with the additional fiscal measures and EU’s backing, while the Euro has come to a more favorable rate for export countries.  In any case this trade is over and we’re now looking at some reversal, at least in the short term.  After all who remembers of the Brazilian crisis 10 years ago?  Brazil is now one of the most promising emerging markets. No that it bears similarities to Greece but the point is that investor sentiment and circumstances change over time. 

The attention may now move to other countries and there’re many countries that may fail their fiscal targets over the next year. One should however look for the ones that cannot raise funds if want to place a bet or hedge (that’s the difference between Greece and the other countries that was compared to over the last months with such comparisons often being unfortunate to say the least).  On the other hand hedge funds may now switch their focus in going long on the global recovery or the next market breakthrough (could this be renewables or emerging markets?) as new capital will be committed in capital markets.

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