Laplace, Louisiana (PressExposure) November 01, 2011 -- "Sanwa Holdings" has told clients that there is virtually "no chance" that Greece will avoid default.
The firm told clients that continued disarray among European officials over whether or not to give the embattled country the next tranche of bailout money had left investors fleeing to the safety of low-risk assets like treasuries and precious metals.
"Europe is in no better position to let Greece default now versus 18 months ago. Yet Greece is exhausting the troika's patience. Mainly this is a dispute about why Greece is missing its targets. According to the Greek side, it is all about the recession, which is bigger than anticipated. Yet the recession does not explain the slow progress in passing reforms or the slow implementation of reforms passed. It does not explain the lack of political will to unsettle constituencies, nor does it explain the political math that politicians engage in when deciding which laws to pass and implement."
Simon Jackman equities director for "Sanwa Holdings" said, "It's Lehman's all over again but this time, in slow motion."
The Greek government also refuses to see how its own actions are making the recession worse. The most recent measure - effectively to levy a new property tax - was particularly depressing. It was depressing because when confronted with the inadequacy of its own measures, the government chose a blatant "grab" measure over an effort to accelerate other changes.
The Asian investment boutique released its stark statement moments before credit ratings agency, Moody's Investor Services downgraded Italy's debt three notches to A2 from Aa2 and placed a negative outlook on the Eurozone's third largest economy.
Greece is now entering a critical phase: it started with a very sincere effort to reform and an impressive fiscal consolidation in 2010. It then slowed down the reform agenda, provoking an intense reaction from those people who saw that it was shirking from its commitment to change the Greek economy and political system. Over time, the reform agenda has become more ambitious in theory but feebler in practice.
"Sanwa Holdings" believes that the seemingly endless bickering and in-fighting amongst the 17-member trading bloc has resulted in a significant loss of confidence that Greece could, indeed, avoid default.
The firm is advising clients to continue investing in precious metals and to continue eschewing the US dollar. It says that the current volatility in prices would subside as the global economic picture deteriorated and forced central banks and governments to intervene.