Domain InvestingEconomics

Why Greece matters to all of us

By April 28, 2010 February 27th, 2017 13 Comments

It could not happen to a nicer country.   2500 years ago Greece was the center of Democratic humanity. Remember Solon’s reforms? Old glory. Today, the country Greece is for sale.  What’s next? Endorsement rights for the Parthenon? Pay attention since this actually matters to the domain name asset class.

epik-parthenon

Why it matters?
This is not going to impact only Greece. It is going to hit right at the heart of the European Monetary Union — which is a fiat currency backed by nothing, and governed by a monetary policy that has no binding influence on national fiscal policy.  As for Greek fiscal policy, a promise made was a promise broken.  The 3% EMU budget deficit maximum was never even achieved during the boom times, and is now completely toast in the bad times.  It was a whopping 13.9% of GDP in 2009.

So, unfortunately for Prime Minister “G-Pap”, the Greek credit card has been shredded.  The IMF is orchestrating what is effectively “Debtor in Possession” financing for the country’s assets.   That would technically include historic treasures like The Parthenon and a bunch of nice islands in The Aegean Sea.

The European Union, just recovering from the “EuroKill” volcanic ash-induced chaos, is scrambling to contain the collateral damage before it spreads to Spain, Portugal, Italy and Ireland. A re-financing of Greece spares other countries — notably France and Germany — from having to write down the principal on their Greek debt holdings.  Bankers call this practice “Extend and Pretend” or “Mark to Fantasy” (as opposed to “Mark to Market”).

Meanwhile, the EMU policy coordination efforts go something like this:

dilbert-meeting

The EMU will be the first to go — and I actually believe it will go. This is one reason why we see the inexorable rise in the price of gold, particularly if you look at it denominated in Euros:

gold_10_year_o_eur

Fiat currencies in general are at risk as central banks continually debase their currencies, effectively accepting asset reflation (some would say levitation!) as the price of wholesale currency debasement. The US is by no means out of the woods here but it is a beneficiary of “flight to quality” in large measure because major commodities are priced in dollars and there is no credible alternative reserve currency, at least for the moment.

The stakes for the global economy are high and going higher.  US budget challenges notwithstanding, the US dollar will continue to benefit from being “backed” by the world’s most powerful armed forces, which provides some assurance of continued access to strategic natural resources, notably Middle East oil, which are to be paid for in … US Dollars.  Google “The Great Game” for more context on that topic.  Here is a politically incorrect primer on where Greece fits into the sequence of dominoes.

Although the timing of the next major bout of economic volatility is not entirely known, certain financial markets are functioning as a “Prediction Market” (anyone want to develop Prediction-Markets.com?).  Two of the more notable prediction markets are VIX — an index of volatility — and Credit Default Swaps.  The VIX index was up 30% yesterday:

vix

And then BAM, Greek Credit Default Swap spiked higher again today (chart) while 2 year Greek Sovereign bonds are being placed with 20% interest rates. Ouch! Greek bonds are now officially Junk status, otherwise known as “not investment grade”.  The smart money knew this long before.

greekcds

There was a good panel today at the Milken Global Conference if you want more.

The Bottom line: Expect the Unexpected.
I stand by my theory that Domains are better than Dollars which I argued here and here.  And even though your personal financial advisor might beg to differ on this advice, I would use any strength in the US dollar to consolidate a position in development-worthy domain names.

At Epik we are also putting our money where our mouth is and are buying domains every day.  If you want to know what we buy (and sell), you can request to receive our Daily Acquisition Report by contacting me at rob -at- epik.com.

In the meantime, expect the unexpected.

Join the discussion 13 Comments

  • Acro says:

    The Parthenon is not for sale, if anything else the marbles that were stolen from it are being demanded back: https://www.bringthemback.org

    Now, I understand that you’re trying to criss-cross current events which have been artificially ballooned with domaining but in that case I’d suggest to go no further than Goldman Sachs – the Shylocks of banking behind the games being played on the back of the Greek economy.

    As a Greek, I am both offended by notions of a sellout of national heritage and land that many Westerners humorously or seriously propose and also dismayed that you’re whoring traffic by introducing the same ‘doom and gloom’ tirades into the domaining world.

    • Rob Monster says:

      @ Acro – With all due respect, Greece has been robbed, or at least is about to be robbed.

      Just because it is not the Greek citizens fault does not mean that the country was not robbed. You can point fingers at any number of banks and hedge funds, but the reality is that the country’s national assets are about to be pledged to an international banking cartel. The best thing that can happen for Greece is for there to be public outrage so this does not happen to more countries who value their sovereignty.

      In terms of interpretation of current events, I happen to favor the Max Keiser reporting of recent events, which you can check out at MaxKeiser.com if you have not visited the site already. A lot of Greeks like him. The Icelanders also like him.

      If you ask me, Greece should exit the EMU. It will hurt at first, but it probably beats the alternative. Tourists will still come to Parthenon regardless of who owns it though it sure would be better if it remained in the hands of the Greek citizens. Unfortunately, that’s not where your country is headed right now.

  • Dead On Correct says:

    Rob, you are so dead on. And this is only the beginning.

    Domainers have no appreciation or understanding of currency/macroeconomic events. When gold spikes, exact match product domain names spike up further.

    There is a race to devalue currency between the US and the EU. It will end ugly with fiat currencies. Gold ETFs have 90% more dollars invested than actual physical gold in existence. This will end badly.

    VIX is going to break out this time. Last time it spiked to 30 in early Feb and then back down to 15. Debt is not just something to brush under the table.

    You can stick a fork in Greece, Portugal, and the other PIIGS. But the end game will come when the UK defaults, who provides no value to the world.

    Fed needs to raise rates NOW by 2% or there will either be hyperinflation or a Japan like deflationary spiral for 2 decades.

  • Acro says:

    Rob, I read Max Keiser as well and he clearly points the finger at banking practices such as that of Goldman Sachs.

    The notion that national assets will be pledged against the debt is not only an outlandish speculation, it’s also an indication of lack of understanding of the Greek society and culture. This would never happen, even if the decision was that of the current or any future government – the people would indeed physically revolt.

    Greece is being used as a scapegoat to attack the euro – this is a calculated plan much like George Soros brought the British pound down in the 90’s. In today’s wired economy, there is little reaction time. Blame the Greeks for taking their time to react, for the reaction will eventually arrive.

  • Jim says:

    I totally agree with Acro and the notion that national assets be pledged against the debt is outlandish bs. It is the present financial system that is broke, brought about mainly by financiers gaming the system rather than driving investment business. Goldman Sucks and the rest of the investment bankers manipulated the system to ensure that they make massive financial gains both on the ups and downs of economies which in turn causes even bigger volatility in the markets. Added to that the rating agencies are a money printing press for the junk economics of Wall Street.

    Goldman Sachs are also behind the Carbon Dioxide trading scam which the media are only beginning to touch on. Trading a meaningless commodity-less gas. But who is getting raped in all this, the middle class. Fraudulent Carbon Dioxide trading lining the pockets of the bankers. The middle classes are being bled dry by financiers who make huge money betting but are bailed out by the taxpayer when the bet goes wrong. The world financial system is still a house of cards and investments in gold are meaningless if a second more extensive dip comes, which now looks more likely. As Acro says “Blame the Greeks” is the latest deliberate and calculated volatility introduced by investment bankers to cash in on betting against the euro. The rating agencies just get the job done.

    • Rob Monster says:

      @Jim – The notion may be outlandish, but the reality is that this is what is happening. Just because it is wrong, unjust, corrupt, cruel and heartless, does not mean that it won’t be attempted.

      The subject of this post, and the image are intended to illustrate the dramatic shift that is in progress — one that impacts not only Greece but many other countries as well.

      Greece should exit the EMU. The notion that they should stay in the EMU is nothing but a “mind prison” — get out, rebuild, and be great.

  • Makis says:

    Title is offending for all us Greeks and not only that, its disrespectful to your blog post in general because its content is way different and far more interesting than the title.
    Reactions was first seen as a mistaken act in December 2008 riots,there more to come but not as riots anymore.
    I too believe that we should either exit EU or default but until then we must try to stay inside EU until there is no hope.

  • Danny Pryor says:

    Too late for Spain. Italy’s next.

  • npcomplete says:

    Great article. There is an interesting discussion this morning of the Greece problem on Karl Denninger’s blog and forum (market ticker). The government employees don’t want to give on salaries, and yet the budget says something has to give.

    It is a “math thing”. yep, something has to give. Sound familiar with other countries’ fiat currency? The US dollar is a relative strength play for now. As for domains, that would be a hard call in a deflationary collapse. The fed wants inflation to help monetize the debt, with a deflationary collapse being the flip side of hyperinflation.

  • Acro says:

    Rob, the only thing to be achieved by shift-blaming and used as scapegoats is that Greeks will revolt in more than one way; this will hurt Eurozone unity with perilous domino-like effects for the international markets. What needs to be done is to hold the Wall Street hounds back. They were let loose and crapped the market; now Greece is being summoned like Hercules to clean the ‘Augean stables’ once more. Sure, tiding up begins at home, but only when one is let go to work on it. Right now, it’s open season and once critical mass is reached, the explosion will be quite epic.

  • Rob Monster says:

    Transparency is the first step. Until about a week ago, most Americans had no idea. Even the SEC lawsuit is as much theater as it is substance.

    People like you are waking up the masses who are still asleep. It is unfortunate that Iceland and Greece had to be the first victims. However, anyone who thinks it stops there is naive — at best.

  • Acro says:

    Rob, I don’t consider being the ‘canary in the coal mine’ a pointless sacrifice. However, a lot of this is nothing but hype, created with ulterior motives. Imagine having to work while someone stood over your shoulder screaming that you cannot do it. With some, it’s motivating. With others, it’s frustrating. The only thing that comes out clear is that Greece is a brotherless nation. The ancient Greek saying of “Summon Athena but move your arms” shows that one should only trust themselves. As others pointed out, it’s financial war and once this siege stops the rocks will be thrown back at those that started it.

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