Juli Niemann: Greek news is ‘Groundhog Day all over again’

Marketplace Contributor Nov 1, 2011

Juli Niemann: Greek news is ‘Groundhog Day all over again’

Marketplace Contributor Nov 1, 2011

Jeremy Hobson: The Greek prime minister has called for a popular referendum on the country’s unpopular rescue package. If people vote no, the whole European debt crisis is thrown back into doubt.

Well that’s where we’ll start now with Nikos Malkoutzis, deputy editor of the Greek newspaper Kathimerini. He’s with us live from Athens. Good morning.

Nikos Malkoutzis: Good morning.

Hobson: Why would the Prime Minister want to ask for a popular vote after he already got this tough stuff through the Greek parliament?

Malkoutzis: Well, the reasons for him asking for it are not clear, and I’m afraid there are going to be a lot of stimulus maelstrom that has been created as a result of his decision.

We are already looking like we may be headed to elections even before we get even to the referendum. The government’s facing a confidence vote this Friday in Parliament, and even if we do get to the referendum, there’s a big fear that it could lead to a no-vote that could have knock-on consequences for Greece and Europe.

Hobson: Well quickly, any chance the Greeks would say yes to this?

Malkoutzis: There’s a possibility, the latest indication we have is a poll on Sunday that says that sixty percent of Greeks feel negative toward the latest deal done with the euro zone. But that’s a mere indication of the moment, in three months — given what’s going on with Greece and the euro zone crisis — everything could change, so it’s very difficult to predict at this stage.

Hobson: Well let’s get a U.S. perspective now let’s get some perspective from Juli Niemann of Smith, Moore and Company who’s on the line from St. Louis. Juli, I was going to talk to you about the Fed meeting that starts today, but what do you make of this news out of Greece?

Juli Niemann: Well the markets basically are looking at it like a train wreck victim telling the doctor how to treat them. And the markets are reacting this way.

It’s Groundhog Day all over again, here we go, flight to safety is launched this morning, no safe havens except for gold and U.S. treasury bonds. We’re seeing massive hedge fund liquidations and that’s going to cause the liquidity prices.

So the only thing that’s growing are the mattresses — they’re getting thicker. And with the Federal Reserve, no moves are expected today because the markets and the economy were showing signs of hope, but now you’re going to see a statement of supporting liquidity in the face of Europe’s permanent crisis here.

And they’re worried that some of the inflation hawks are going to be quashed for the time being, but it really is all about now keeping and supplying the markets liquid with cheap cash.

Hobson: Juli Niemann, analyst with Smith Moore and Company, and Nikos Malkoutzis in Athens, thanks so much.

Niemann: You bet.

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