That’s what the EUR/USD forex pair has been doing in the last 5 trading days. When will we see a meaningful direction forming?
SNB’s intervention on the forex markets yesterday selling Swiss francs in a bid to weaken the currency didn’t hold for long. Speculators and other forex traders brought the franc back to pre-intervention levels. Here’s the hourly chart which speaks volumes about the futility of central banks’ forex interventions:
I don’t know if you’ve noticed but the price of silver has been going through the roof during the last several months. The reason, as explained by legendary investor Jim Rogers:
Here is a great look at the Greek problems, copied off the comments section of the Telegraph newspaper.
In very un-Icelandic fashion, last week protestors in Athens tried to blow up a downtown courthouse. Over a year after the Hellenic meltdown, the Greek newspapers still reflect the popular fury—protests, strikes, senseless violence—at the mandatory cutbacks, the public sector layoffs, and the high-interest needed to attract investors to shaky Greek bonds. And yet amid the furor, 60% of the public still polls in favor of the European Union. How are we to diagnose the drowning non-swimmer who eagerly grasps—and yet hates—the life preserver?
A bit of story-telling: When I lived in Greece in the 1970s, it was a relatively poor country. The road system was deplorable; the airport at Athens was little more than an insulated warehouse. I usually stayed in hotels with bathrooms down the hall. A bus trip of about 200 miles translated into about a six hour marathon. The buses were often of eastern European make and spewed black smoke into the Athenian air whose toxic bite could devour marble. Rail travel was nightmarish (biking was quicker). There was no bridge across the Gulf of Corinth. The Athens “subway” was little more than a 19th century electric carriage.
Greeks’ second homes were one bedroom village affairs. It was rare to see a Mercedes in Athens. I knew one Greek who had a swimming pool. Getting off an island ferry boat usually meant meeting a swarm of older ladies trying to hawk you their extra bedroom for rent.
You get the picture:1970s Greece reflected a small southern Balkan population wedded to a siesta lifestyle, on a rocky peninsula in which there was little wealth other than tourism, a poorly developed agriculture, some shipping, and remittances from Greek expatriates in the United States and Germany.
Fast forward to the post-Olympics Greece: five star hotels, 20,000 plus private swimming pools (most of them unreported for tax purposes), half the work force ensconced in cushy government or government-related jobs, Attica dotted with Riviera-like second homes, BMWs more common than Mercedeses, billions of euros worth of new highways, and a new airport and subway system.
In other words, somehow a country without a manufacturing base and with poor productivity, a small population, an inefficient statist economy, and bloated public sector suddenly went from near third world status to a standard of living not that much different from a Munich or Amsterdam. How? Did Greek socialism produce all that wealth?
Well, we know the answer: northern European cash – borrowed, given, or swindled. The radical new affluence in part was justified by the fact that Germans and Scandinavians wanted good infrastructure and facilities when they went on their annual summer Greek vacations – along with pan-EU pipe dreams and fraudulent Greek book keeping that disguised massive debt.
Now it’s all over with and the Greeks are furious at “them.” Furious in the sense that everyone must be blamed except themselves. So they protest and demonstrate that they do not wish to stop borrowing money to sustain a lifestyle that they have not earned – but they also do not wish to cut ties either with their EU beneficiaries and go it alone as in the 1970s. So they rage against reality.
