The Greek economy appears to be very much the welfare state to me. I don’t see innovation and exports coming out of Greece, but I see a lot of public union strikes over their insistence that excessive pay, pensions and subsidies continue as if they live in a complete vacuum.
Since Europeans have lost their appetite for funding Greece’s debt, the next stop is Us investors. While Greece may want to blame Easter (yeah right!) on the tepid interest in their debt, the reality is investors are saying “not so fast”. According to the Financial Times, Greece is looking to sell 5-10 Billion Dollars in bonds to US investors to roll over its debt to existing creditors. The 10-yr benchmark yield stands at 6.5%.
HairDressing is Hazardous Work? Full Pension at 50?
Seriously, on the same day the US is learning of a mine explosion in west Virginia that killed 25 workers, hairdressers in Greece are considered to be employed in a hazardous industry that requires early retirement (NYTimes) and they enjoy a full pension at age 50.
“The law… also covers radio and television presenters, who are thought to be at risk from the bacteria on their microphones, and musicians playing wind instruments, who must contend with gastric reflux as they puff and blow.”
While there’s a large contingent of Americans that would gladly “puff and blow” just for a paycheck, let alone a guaranteed full pension at 50, this is the world Greeks live in. It’s absurd and I want no part of supporting this lunacy. At its most basic level though, even at yields of 6.5%, I’m just not attracted to Greece as an investment. I can easily buy a high yield ETF or US corporate bonds from blue chip names which would bring both a better credit rating and diversification to my existing portfolio. And while many US municipalities are in trouble, I even view muni bond ETFs as a safer alternative – and they’re tax free to boot!
It is a free market after all, and given the right yield, there will eventually be adequate demand to roll over this debt, but I wouldn’t touch Greek debt even at double this yield. The situation simply seems untenable to me and eventually investors will balk at the modest austerity measures proposed.
What About You?
Would you Invest in Greece?
At What Yield?
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