Hedge Fund Manager sees US becoming Greece

[ochotona]

{BTW - Greece now, 14 years later, has a budget SURPLUS...}

"Maybe you forget Grexit, the nickname given to Greece's multi-year financial crisis in the mid-2010s. It had many people, investors and governments worried the small nation would be forced to withdraw from the European Union.

It was a big deal at the time. Greece was a financial and economic mess because government spending was far greater tax revenue. It caused financial outlets to devote many, many column inches or many, many broadcast minutes debating what might happen if Greece was tossed from the European Union."

https://www.thestreet.com/investing/hed ... ing-greece

[Smith1776]

Yeah, I remember... there were suicides reported in the news over their citizens' feelings of economic hopelessness.

[dualstow]

I just remember author Michael Lewis saying they behaved (financially) “like pigs.”

[glennds]

I remember that there were traders that made a fortune buying up Greek debt when it was heavily discounted during the crisis. Those (risky) bets turned out to be a reverse version of the famous Big Short stories of people who bet against the US housing market in 2006. Fortunes were made.

So from the thread title, you wonder if the PP rebalancing strategy will force adherents to buy Treasuries when they are out of favor, which will later prove to be a phenomenal trade?

[dualstow]

I happened to read about the Greek crisis in Nadav Eyal’s book on troubles from globalization.
The author spent a huge amount of time in the country as his father ran a small business there.
It was like what Glennds said. A lot of traders profited.

Additionally, the Greek government sent misleading figures back to French and German associates in the EU, making it look like Greece wasn’t over the crucial 3% in debt vs GDP. The loans flowed.
The EU didn’t really invest in Greece so much as flood them with money with the hope that it would flow back to them.
When the crisis hit, it became apparent that the real debt was more like 15%.

I’m glad they’re doing better now.

[seajay]

Many countries are just pacifying Trump, be yes-men in his presence, but are planning their own thing. In 1930 US exports to Europe amounted to 2341 million, by 1932 following reciprocation against US tariffs that had declined to 784 million. Henry Ford called the protectionism/tariffs 'stupidity'. The most pain is inclined to be felt by the US, as others are inclined to redirect trade and with low/no tariffs between themselves. But such transitions away from over-dependence upon the US takes time (years), once that ball is rolling however and as per 1932/Wall Street Crash years the consequences can be dire.

Greece did at least have a back-stop, yes the EU/Germany made them endure pain, but push come to shove would have stepped in with assistance.

[ochotona]

I had a thought (dangerous, right?).

The US auto industry is self-segregating to become a USA-only supplier. The gigantic and costly vehicles and wasteful (of fuel) vehicles here don't sell overseas.

So I definitely see a repeat of the 1970s on the move now, where the US auto industry is so un-diversified globally that when we finally have a recession here, it's going to fall hard, because there won't be foreign markets to depend on.

That would "Make America Greece Again".

[seajay]

others are inclined to redirect trade and with low/no tariffs between themselves. But such transitions away from over-dependence upon the US takes time (years), once that ball is rolling however and as per 1932/Wall Street Crash years the consequences can be dire.

I stand corrected and note that in general others trading with the US have recently seen quite sharp declines, of the order -6%, offset by typically +12% trade expansion with others. Still early days but such transition/levels are significant and rapid. Trump applying a additional 10% tariff against BRIC supporting nations when the core BRICS comprise 3/8ths of the global population, closer to two thirds including associates ... is perhaps just inclined to hasten the transition of trade redirections. I suspect that the trigger point will be US bond vigilantes at some point dumping large volumes of US Treasury's and the US Dollar. A form of 1970's/1980's repeat when Harry made a fortune from gold - which then later if rebalanced into long dated treasury's at high (double digit) yields can have you significantly wealthier than your peers.

[seajay]

UK imports of US cars plunge 60% in June 2025. Similar likely elsewhere. Trumps ever dynamic changes in tariffs are pretty much making buying from or selling to the US as non viable. Much trust has also been lost. In another year I wouldn't be surprised to see high reciprocal penalties against other US exports such as services, enticing the likes of Microsoft/Nvidia to perhaps relocate their domicile to outside of the US. Once Russia calms down I suspect it wont be too long before the likes of the EU are also importing gas/oil/food in high volumes from Russia whilst imposing heavy tariffs/penalties on US oil/gas/food exports. Trump likes to bully, and for the time being other countries are just politely bowing to him, sooner or later however that bullying is inclined to backfire potentially big-time.

Indian tariffs revised 25% higher today. I suspect India may very well turn around and just say meh! Opt to deal/trade much less with the US and instead focus upon trade expansion with others.

[boglerdude]

Nice, negotiating for a Bolt EV next week I'll print that post