Greece Facing “Titanic” Problem

April 15, 1912. Early in the morning of this fateful day, the unsinkable Titanic went below the waters of the icy Atlantic and sank to its eventual berth on the ocean floor.

In the process of hitting the iceberg that dealt the Titanic its fateful blow, the air of invincibility surrounding this greatest of ships became an air of inevitability.

With all due respect to those who perished that cold night in those icy waters, are we witnessing a similar dynamic playing out on our global economic landscape for the once proud nation of Greece?

Were derivative transactions executed on behalf of Greece by Goldman Sachs mere band-aids covering massive holes in the hull of this once proud nation? No doubt.

The Telegraph highlights the inevitable reality of Greece’s fiscal disaster in writing, Greece Tells Eurozone It Needs Time: ‘We’re Trying to Change the Course of the Titanic’:

The country is the first in the euro’s 11-year history to require an emergency statement of political support from other European countries as it struggles to weather pressure from financial markets worried about its massive debt.

But Finance Minister George Papaconstantinou warned against asking the government, which faces growing public dissent over budget cuts, to do too much too fast.

“We’re trying to change the course of the Titanic, it cannot be done in a day,” Mr Papaconstantinou said ahead of meeting with euro zone finance ministers in Brussels.

“If additional fiscal measures are needed, we will take them. Today it is Greece, tomorrow it can be another country. Any European country can be prey to speculative forces.”

Speculative forces? Isn’t that what we heard from the captains of commerce heading Bear Stearns and Lehman Bros.?

Excessive debts combined with cuts in easy and ready access to liquidity is a death knell for any entity. While Greece will very likely be afforded some type of lifeboat by the EU, do not expect this process to be without significant pain. The Telegraph highlights as much:

Greece faces two major hurdles in the coming months, with two lots of more than €8bn of government bonds to refinance on April and in May. Markets had hoped last week that meetings this week might generate commitments of actual financial aid.

But European Monetary Affairs Commissioner Olli Rehn suggested that the talks in Brussels, which officials said were not aimed at producing a concrete rescue plan, would focus on demanding more of Greece than it has announced.

I empathize with the Greeks and the reality of their dire fiscal situation. That said, nations can not operate with massive holes in their fiscal foundations and think that the icy waters of the financial markets will not ultimately take them down.

There is a serious lesson in this Greek drama for all of us.

About Larry Doyle 522 Articles

Larry Doyle embarked on his Wall Street career in 1983 as a mortgage-backed securities trader for The First Boston Corporation. He was involved in the growth and development of the secondary mortgage market from its near infancy.

After close to 7 years at First Boston, Larry joined Bear Stearns in early 1990 as a mortgage trader. In 1993, Larry was named a Senior Managing Director at the firm. He left Bear to join Union Bank of Switzerland in late 1996 as Head of Mortgage Trading.

In 1998, after 15 years of trading and precipitated by Swiss Bank’s takeover of UBS, Larry moved from trading to sales as a senior salesperson at Bank of America. His move into sales led him to the role as National Sales Manager for Securitized Products at JP Morgan Chase in 2000. He was integrally involved in developing the department, hiring 40 salespeople, and generating $300 million in sales revenue. He left JP Morgan in 2006.

Throughout his career, Larry eagerly engaged clients and colleagues. He has mentored dozens of junior colleagues, recruited at a number of colleges and universities, and interviewed hundreds. He has also had extensive public speaking experience. Additionally, Larry served as Chair of the Mortgage Trading Committee for the Public Securities Association (PSA) in the mid-90s.

Larry graduated Cum Laude, Phi Beta Kappa in 1983 from the College of the Holy Cross.

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