Crisis – Page 4 – Abnormal Capitalist

How Europe Crushed Greece

Op-Ed by Yanis Varoufakis :

The fact that few people ever got to hear about the Greek plan is a testament to the eurozone’s deep failures of governance. If the “Athens Spring” — when the Greek people courageously rejected the catastrophic austerity conditions of the previous bailouts — has one lesson to teach, it is that Greece will recover only when the European Union makes the transition from “We the states” to “We the European people.”

Across the Continent, people are fed up with a monetary union that is inefficient because it is so profoundly undemocratic. This is why the battle for rescuing Greece has now turned into a battle for Europe’s integrity, soul, rationality and democracy. I plan to concentrate on helping set up a Pan-European political movement, inspired by the Athens Spring, that will work toward Europe’s democratization.

Credit: Death of Euros, Goin

→ The New York Times

Blaming China for Black Monday is Like Blaming a Bartender For Your Hangover

Pubonomics :

What is happening? Why is China—the country that people once thought was the engine of the world economy—tottering so badly ?

To answer these questions it is necessary to recognize that China was never the engine of the world’s growth. To be such an engine you have to import more than you export. Then you would create a demand that is filled by other countries, which as a result export more than they import. Importers are the engines in the supply trains of the international markets. Exporters are the wagons, pulled by the demand created by the profligates. Think of what drives liquor markets: barmen or drinkers?

→ Quartz

Credit: Michael Lomax, Impossible Bottle

Black Monday, Kinda

Monday, August 24th brought you one of the weirdest trading day ever seen in the past several years.

So to sum up what happened today, here are a few charts, courtesy of Bloomberg, ZeroHedge and NANEX — time of the events may vary :

It all started sometimes in China, when it’s business as usual these days :

S&P Futures followed, kissing the dirt :

Which then started a major liquidity squeeze on the US market, as seen on the following charts by NANEX :

Causing buy-sell orders to never quiet match — courtesy of ZeroHedge :

Shortly after the opening bell, something like this on the Dow Jones :

And an impressive rise on the VIX :

In the meantime, major (mini) crashes :

To prevent further deterioration, just press the “HALT” button across major indices, including 3 consecutive press on the NASDAQ and 1’200 times during that day :

Then the master of markets, Tim Cook, dropped an email to Jim Cramer stating the following :

I get updates on our performance in China every day, including this morning, and I can tell you that we have continued to experience strong growth for our business in China through July and August. Growth in iPhone activations has actually accelerated over the past few weeks, and we have had the best performance of the year for the App Store in China during the last 2 weeks.

Which caused this :

Then, all of a sudden, while unrelated from the previous event — well, who knows :

Oups…

…While European markets will stay stucked for a little longer :

There’s more to it for sure, but here are some events, mostly correlated, to show the newcomer what’s up for today on the trading side.

Finally here’s a fun tweet from Josh Brown :

@ReformedBroker: Look, it doesn’t matter what you bought or what you sold. The important thing is that you panicked.

The Greek Warrior

A few years ago, Varoufakis told Yorgos Avgeropoulos, a documentary filmmaker, that the difference between a debt of ten thousand euros and one of three hundred billion euros is that only the latter gives you negotiating power. And it does so only under one condition: “You must be prepared to say no.” Upon his election, Varoufakis used the less than ideal influence available to a rock climber who, roped to his companions, announces a willingness to let go. On behalf of Tsipras’s government, Varoufakis told Greece’s creditors, and the world’s media, that his country objected to the terms of its agreements. This position encouraged widespread commentary about Greece following a heedless path from “no” to default, and from default to a “Grexit” from the euro currency, which might lead to economic catastrophe in Europe and the world.

→ The New Yorker

Europe Should Welcome Greece’s Vote

In reality, both Greece and the rest of the eurozone should treat the Greek vote as an opportunity to rethink the malfunctioning euro project. They can find a common interest in making it as painless as possible for Greece to leave the euro — both to lessen the suffering of ordinary Greek people and to establish a model that other countries might be able to follow in the future. For Greece is not the only country struggling to cope with a currency union. The current crisis could be a chance to show there are ways out of the euro that could benefit all sides — those that leave the currency union and those that stay.

→ Financial Times