How to Profit From Greece's Misery

Includes: DRR, EUO, NBGGY, UUP
by: Benzinga

By Daniel James Hayden IV

German Finance Minister Wolfgang Schaeuble said that if Greece has trouble financing its debt, Germany will be willing to help, but that any new aid will have to be tied to "clear conditions."

The problem is that the Greek government has a problem with accepting agreed upon financial conditions, then spending too much money and asking for more.

Much of Greece was shut down recently as hundreds of thousands of Greeks took part in a general strike in protest against a further round of proposed austerity measures aimed at reducing Greece's fiscal deficits.

The Greek government already implemented a number of measures in order to get a 110 billion euro bailout from the European Union and the International Monetary Fund last year.

The measures, which included a wide range of budget cuts and tax increases, hit the service sector particularly hard and it's those workers who led the general strike, with government offices, school, public transportation and even hospitals and ambulance service negatively impacted.

The Greek economy is in serious trouble and many consumers have seen their disposable income drasticly reduced, so another round of austerity measures has met with widespread resistance.

The world watched last year as protests against austerity measures turned violent and deadly and there is concern that Greece could see the general strike and protests turn deadly once again.

This has put pressure on Greek officials to explain to the populace the necesity of the spending cuts and tax increases, while European officials look for a way to keep Greece from defaulting on its debts.

While many European officials like German Finance Minister Wolfgang Schaeuble say that Europe is ready to stand by Greece in its time of need, there is a growing backlash among citizens of countries like Germany and Finland who feel they are being punished for the poor financial management in countries like Greece, Portugal and Ireland.

Between Greek protesters who are urging their government to default on its huge debts and the citizens of financially stable countries who are tired of seeing their tax dollars used to prop up the finances of Greece and company, there is a growing risk that Greece may default on its debts or even drop the euro as its currency.

There have also been reports that the spending cuts and tax increases proposed in Portugal will send that country's economy deep into recession.

If that comes to pass, then the Portugeuse may begin to question whether or not it's in their interest to keep the euro as their currency and pay down their debts.

Not to mention the fact that the Irish who will be watching the situation may question whether or not the financial hardship they will have to endure to save their banks from going bust is worth all the trouble.

Investors who feel the euro is in serious trouble will want to consider putting their money into the ProShares UltraShort Euro (NYSEARCA:EUO) or the Market Vectors Double Short Euro ETN (NYSEARCA:DRR).

In the event that Greece, Portugal or Ireland defaults on their debts or drop the euro as their currency, these two ETFs could see their share prices climb higher.

Another play on this theme is the PowerShares DB USD Index Bullish (NYSEARCA:UUP). If the financial crisis hitting many of Europe's troubled countries gets much worse, there is likely to be a run to the traditional safe haven currency, the U.S. dollar.

On the other hand, what better place for adventurous, risk loving investors to put their money into than a Greek bank?

For those contrarians who think that this too shall pass and that things are so bad in Greece that they can only get better, the National Bank of Greece SA (NBG) might be worth taking a look at. And at just $1.44 per share it sure is cheap.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.