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Greece's Debt And Other Tragedies: The Never-Ending Story May Be Over Soon (Parallel Currency And Brexit Next?)

|Includes: Global X MSCI Greece ETF (GREK)

If one looks at this good summary from the WSJ "what Greece owes when" (see following link) it becomes clear Greece can't make its upcoming huge debt payments without further haircuts, the only question is when and how much is cut - or Greece will default:

graphics.wsj.com/greece-debt-timeline/

That was of course quite obvious a long time ago (the problem was bailing out the lending financial institutions and other creditors with IMF and EU money in the first place back in 2010, but that's another story. Greece should have simply defaulted back then in my opinion. It would have been a cleaner way out with less long-term suffering for the population - the EU and IMF simply bailed out the foreign banks, the whole EU and its taxpayers now bear the burden and Greece's citizens are most likely worse off. This was simply another mega-bank bailout...)

My estimate is that after five years of haggling and tiring negotiations the EU's patience may be up for Greece in the coming weeks and months.

The current spikes in the EURUSD trade and a stronger EUR don't seem warranted - today's IMF 'warning' looks like a rather weak attempt to keep the strong USD under control:

IMF warns US Federal Reserve should delay rate hike until 2016

www.cnbc.com/id/102730170

By the way, when did the IMF ever release such a stern note toward a major country? Quite astonishing. I'm certainly not the only one who noticed this today:

FYI, #IMF statement on #US calls for @FederalReserve to delay rate hike until 2016. Unusual for the institution to be so explicit & specific

twitter.com/elerianm/status/606456781888...

To be continued.

One day these political talks will break because of the sheer numbers involved, there's simply no way Greece can ever make these payments in full in my opinion.

Tomorrow is the first real test in months for Greece and the EU in this endless brinkmanship game:

Seeking compromise deal, Greece warns it might skip IMF payment

www.reuters.com/article/2015/06/03/us-eu...

Some also call again for a parallel currency to be introduced, see for example here

www.bloomberg.com/news/articles/2015-06-...-

and here (article in two parts):

www.voxeu.org/article/parallel-currency-...

www.voxeu.org/article/parallel-currency-...

It doesn't stop there - even if Greece gets another huge haircut/ bailout, even if a parallel currency is introduced or if an uncontrolled Grexit accident happens:

The next big question for Europe then becomes whether the UK wants to make an exit from the EU one day.

In short, I continue to see a weak EUR (and a very weak JPY, see my separate blog entries on Japan's huge public debt pile) ahead in these environments.

Additional disclosure: I was and am short the JPY (hedging for shares and holdings denominated in JPY)