Remember the Great Greek Economic Crisis — of May 2010?…

Here’s some thing I came across last night doing some research for a piece I’m writing.  Take a look at the date….did you remember that Greece had huge social uprisings and budget crises and austerity measures going thru….back LAST May?  As in May 2010!  Read the column, read my analysis and conclusions and you’ll see that I could have written (and practically did!) the same thing during last month’s Greece crisis.

May 5, 2010, 2:58 PM ET

Greekonomics and you: What the fiscal crisis and protests in Greece mean for your portfolio

I turn on the financial media TV today and it’s not just dominated with the latest “to bail out or not bail out Greece, that is the question” discussions, but they’re showing mass protests and reporting that people are dying over there over these economic hardships.

The markets were down 2-3% across the globe yesterday including here in the US, and when the futures were pointing down so huge this morning, the question on everybody’s mind became, once again, “Is this Greek economic crisis contagious?”

And as the announcer bumps to the commercial break by simply repeating the question of the entire discussion they’d just had “Is this Greek economic crisis contagious?” I had a deja vu — I remember being in discussions back in 2007 on TV about whether “the meltdown of subprime lending would be contained”.

As I wrote back at the time, in June of 2007 as the markets were still in full out rally mode despite subprime melting down around them:

The Bear Stearns hedge fund blow up will indeed ripple across some unforeseen markets and companies in the coming weeks and months. After all, the blow up is itself a ripple effect from the still-ongoing subprime meltdown. Why do I so confidently call the meltdown “ongoing”? See above. It’s not over. In terms of the ripple effect on our economy and markets, the question is one of magnitude, not whether it will happen or not.

Subprime did indeed ripple through our economy and markets, wouldn’t you say?  So the question that everybody’s actually asking, especially after the lessons learned from subprime’s contagion, is: Is this Greek meltdown likely to roil our country’s economic prosperity the same way subprime and the mortgage crisis did and will my stocks get crushed again?

The short answer is: Yes, it will hurt our economy, but no, it probably won’t roil our prosperity the same way subprime’s contagion did and this probably won’t be a catalyst for taking the DJIA back to 6,000.   Now I don’t want to down play this crisis, which is indeed a full-fledged “economic crisis” because it certainly does have the potential to derail our economy and stock markets.   But the biggest differences between the Greek meltdown and the subprime meltdown is twofold:

1. Public credit crises are easier contained than private credit crises.   Economic crisis based on sovereign government’s inability to pay its debts is bad, but these guys can play games with their currencies and their trading partners and the lenders to kick the can down the road a few more years.   An economic crisis underming a multi-trillion dollar private marketplace, such as real estate here in the US is, is much harder to gimmick away.

2. Greece ain’t America.  Sure, we’re an interconnected global economy, but Greece’s government isn’t nearly as big or important as the US’ real estate market is.

Again, it’s the fact that we have to navigate these types of governmental, global crises and their potential to roil our portfolios is exactly the reason why I started Revolution Investing with  But the really good news is that there are ways to profit off of what’s happening in Greece– indeed, in recent newsletters, Ie’ve been all over the Greek crisis and I’ve got the best way to play its ramfications already in the portfolio and making subscribers some money.  You can sign up to get all my stock picks, including the best way to play Greece’s impact on the US at

Before we move on, let’s hit on some important political implications stemming from the Greek fiscal crisis which has been quickly explained away by the mainstream media and analysts as being one of protests by mostly public employees and other working class people who are upset about the big benefit cuts they’re about to be forced to take in order for the Greek government to keep from going bankrupt.

Problem with that analysis is that once again, the real problem here is corporate welfare and bailouts for corrupt bankers and their shareholders.  Look, the Greek government spends a lot of social programs.  According to the OECD, they don’t spend much more on those services than the rest of the so-called developed countries do:

Greece clearly spends a whole lot on welfare programs for the poor, underpriviledged and working class, it’s just that you can’t say those programs are much different than what we offer the poor, underpriveledged and working class here in our country and in most of the other socialist countries that the OECD calls developed.

But the main unreported reason people are protesting these cuts are because the poor and working class are being asked to give up their welfare benefits AFTER THEY BAILED OUT THE RICH BANKERS IN GREECE AND THE REST OF THE EU.

Don’t forget how much money the EU took from the savers and fiscally responsible and gave to the corrupt banks and their shareholders in the name of “protecting the system” in the last couple years.  The people of Greece haven’t forgotten that:

April 10, 2009, 9:27AM EST

European Bank Bailout Total: $4 Trillion

EU countries may have moved more slowly to rescue banks, but their total commitments have now reached a staggering sum, Brussels reports


EU governments have committed €3 trillion to bail out banks with guarantees or cash injections in the wake of the global financial crisis, the European Commission said on Wednesday (8 April)….

As I ask every single Republican and Democrat who found trillions of dollars of welfare for the bank bailouts and “system-protecting” bank entitlement programs that the Fed and Treasury have lobbied for here in this country in the last three years:  Do you not see the class warfare that these bailouts engender?  You think people will let you cut teachers’ and cops’ jobs now that you don’t have the money because you’ve redistributed too much of it to the banking system and the ownership class?


Cody here in present day.  You know what I think?  I think it’d be funny if it weren’t such a sad statement about our political realities in the 21st century…and if it weren’t so profitable to see these same panic attacks create the same opportunities at different times and places.