Oil and Greece's death

After further negotiations, the Government committed in recent elections Athens, scramble to secure workable are due in Greece.  This document provides the opinion and political turmoil, the global markets as Greece political unrest shakes you to the explore the potential impact of the oil.

15. in article in may 2012 MONEYMORNING
Continue to show weakness in the eurozone, Greece, in the event , you can speed up the situation. NYMEX crude oil prices downward movement that both London and the rising concerns.
In the aftermath of the election, the second in the limelight as the new Greece radical left SYRIZA party is strong in the country, promoting the party. The bailout reform permit SYRIZA leadership given by firmly refused, the party's new brokerage locations means that the crisis will continue.

Bitter austerity measures had received a majority of seats in the Congress of the party vote, the coalition Government formed after waiting. The Socialist PASOK party, allies new democracy for almost four decades, Greece is supported by taking turns ruling.

However, in a surprise showing of SYRIZA, the possibility of a Pact were thrown to chaos.

At best, that is likely to further delay new elections.

On the other hand, there is little time left in Greece. Any Government formed more delay will vote differently, very angry population, around next time you are at risk, not the European Union puts the next tranche of the bailout package.

It is now rather than leave Greece (or possibly pushed out of) the eurozone, currency and region in the State's southern tier in still greater uncertainty cast.

…What then?

While the current focus of concern Spain Italy renewed weakness is also on display.

Greece, Spain, Italy and Brussels, the ability of any debt problems which led to support packages. dwarf These economies are simply being rescued from the "external" is too large.

Infections can actually depart promptly Greece concerns, therefore, most thought possible before.

…Including me.

Leave the eurozone currency strength and all the members have a negative impact on the Economic Outlook. It is also evident in Spain or Italy, from how to Greece: crutch Each of these economic problems are endemic; They mainly do not result in a situation of Greece "spillovers".

All of the former United States Secretary of Defense Donald Rumsfeld to borrow a phrase from the known unknowns "means there are" now facing financial problems are essentially U series credit and this is part of the "known" of the equation. Overall, the euro has fallen much flowing through large scale computation is "unknown".

This, in two major economies using the euro on recent developments in Germany and France stand-by. All the European Union members about rescue package available without these two dominant European economic leadership. To date, the Paris-Berlin is a strong political undercurrent Germany production and trade of added protection, while the financial sector, stresses the protection of the suspect.

However, the recent election of a Socialist France and Germany's economy is slowing has been elected to the signs and are surfacing that face Greece questions "abstinence for remedies" approach will put continued support.

So far, all the major countries, strongly insisted that the euro's retention require that have led to the E.U. Greek approach. The dramatic political events unfolding in Athens to support is rapidly undermined.

And this has impact on the price of crude oil.

Like the oil market: 2008?

The only way of coming down the oil pressure is external (exogenous, analysts say) itself, the oil market.

This is what happened in 2008. Oil prices rose and gasoline, diesel, heating oil, which, like the spike in the cost of petroleum products had retreated to the credit freeze the entire weight is when the subprime mortgage leads.

Overall demand in the ensuing recession as a blow dryer.

We are concerned by the falling demand level confusion, parallel European prices for similar short-term withdrawal.

However, there are three important differences.

First, the United States economy is larger than itself (the world overseeing their a trader of j.p. Morgan) takes place on the continent.

Second, to determine the level of oil demand actually price will keep that part of the world. As I have said many times before, these are North America, Western Europe or developed (Agency OECD) countries. This development is based on the new economy different acceleration.

In addition, some importance is the third element of the.

2008 collapse and the dollar denominated assets, trading mainly with the primary assets of the global network of cross-border capital flows and a worldwide recession results-part I.

Not so for around an hour.

The current situation, the euro tends to benefit from the value of the dollar for. Almost all the international oil trade and the implications of the dollar will stabilize prices for a time. However, it also means increased assets focused on oil trading.

And despite the events in Europe and the ultimate value of the oil contracts, as well as increased demand and rising euro zone problems vital to-by direct impact occurs in that area of the world, especially in the market.

So say goodbye to Greece, Spain, good luck.

The dust settles once oil holdings will continue to rise over the next exhibit considerable value.

Dr. Kent Moors
Contributing editor, money morning

Oil and Greece's death

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Oil And The Death Of Greece

AppId is over the quota
AppId is over the quota

Further talks are due in Greece as Athens scrambles to secure a workable government after the inconclusive recent elections.  This article gives an opinion and looks at the potential affect the Greek political instability is having on Oil as political turmoil shakes global markets.

Article from MONEYMORNING on 15th MAY 2012
As the Eurozone continues to show weakness, events in Greece may accelerate the situation. The downward movement in oil prices in both London and on the NYMEX testifies to the rising concern.
The aftermath of the Greek elections propelled the new radical left party SYRIZA into the limelight as the second strongest party in the country. Given the adamant refusal by SYRIZA leadership to accept bailout reforms, the party’s new brokering position means the crisis will continue.

Bitter austerity measures await the formation of a coalition government, since no party received a majority of the seats in parliament from the vote. The coalition is supported by both the New Democracy and socialist PASOK parties, which have taken turns ruling Greece for nearly four decades.

But the surprise showing of SYRIZA has thrown the possibility of an accord into disarray.

At best, this means a further delay and likely a new election.

On the other hand, Greece has little time left. Any further delay in forming a government, with not guarantee that a very angry population will vote differently the next time around, puts the next tranche of the European Union bailout package in jeopardy.

It is now more likely that Greece will leave (or be pushed out of) the Eurozone, casting a greater uncertainty on both the currency and the southern tier of countries still in the zone.

…What Then?

Spain is the current focus of concern, but Italy is also exhibiting renewed weakness.

Unlike Greece, Spain and Italy have debt problems that dwarf the ability of any Brussels-led support package. These economies are simply too large to be “rescued” from the outside.

The concerns over contagion, therefore, may actually expedite a Greek departure earlier than most thought possible.

…Including me.

It is true that any members leaving the Eurozone will have a negative effect upon currency strength and economic prospects. It is also unclear how the Greek departure will aid in shoring up either Spain or Italy. The problems in each of these economies are endemic; they are not primarily a result of “spillovers” from the situation in Greece.

All of which means, to borrow a phrase from former U.S. Secretary of Defense Donald Rumsfeld, there are a series of “known unknowns” now facing the E.U. The credit and banking problems are essentially the “known” part of this equation. The extent of the fallout on the euro as a whole is the massive “unknown” flowing through the calculations.

This is accentuated by recent developments in the two major economies using the euro -Germany and France. No rescue package for any E.U. member is possible without the leadership of these two dominant European economies. To date, Paris has emphasized protecting its suspect banking sector, while Berlin has a strong political undercurrent demanding additional protection of German production and trade.

However, the recent French elections, in which a socialist has been elected president, and indications surfacing that the German economy may be facing a slowdown, will put continued support of a “bailout for austerity” approach to Greece in question.

Thus far, both major nations have led the E.U.-Greek approach, strongly arguing that the preservation of the euro demands it. The dramatic political events unfolding in Athens are rapidly undermining that support.

And this has impacted on the price of oil.

The Oil Market: Like 2008?

The only way oil prices are coming down is by the advance of pressures outside (exogenous to, as the analysts say) the oil market itself.

This is what happened in 2008. The rise in crude and the corresponding spike in the cost of oil products like gasoline, diesel, and heating oil retreated only when the full weight of the subprime mortgage-induced credit freeze hit.

Overall demand dried up as the ensuing recession hit.

We are seeing a similar short-term pullback in prices as concerns over falling demand levels parallel the European confusion.

Yet this time there are three important differences.

First, the American economy is largely insulating itself from what happens on the continent (assuming the JP Morgans of the world can oversee their traders).

Second, oil demand continues in those parts of the world that actually determine the pricing level. As I have said a number of times before, these are not North America, Western Europe or the developed (OECD) countries. This is based on developing and accelerating new economies elsewhere.

There is also a third factor of some importance.

The 2008 collapse and resulting worldwide recession centred on dollar-denominated assets, the assets basic to the global network of trade, cross-border capital flows, and wealth.

Not so this time around.

The current situation tends to benefit the value of the dollar against the euro. With virtually all international oil trades in dollars, that does mean prices may stabilize for a time. But it also means the concentrated asset wealth in those oil transactions will increase.

And despite the events in Europe, the ultimate value of oil contracts will increase as well – especially in a market where the essential rise in demand is occurring in those regions of the world not directly impacted by the euro zone problems.

So, farewell Greece, good luck, Spain.

Once the dust settles, oil holdings will continue to exhibit significant value gains moving forward.

Dr. Kent Moors
Contributing Editor, Money Morning

Oil and the Death of Greece

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