Sun, Sep 22, 2019
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Opalesque Futures Intelligence

Is the "Greece Problem" Really an "American Problem?"

Those who think the deficit problems are limited to Greece should listen to managed futures CTA George Tzanetatos, who is said to have predicted the Greek debt crisis in a speech in 2009 to a banking convention in Athens, Greece.

Monday, July 02, 2012

The "Greece" Issue is Really an "American" Issue
By Mark Melin

After several conversations with Chicago-based managed futures CTA George Tzanetatos of Tzanetatos Capital, one is afforded insight into the difficult debt crisis problem.  Mr. Tzanetatos notes he predicted the collapse of the Greek economy and identified worldwide depression risks before it became apparent, announcing his forecast and findings in a presentation in the annual Greek Banking Asset Forum in Athens in May of 2009.  Mr. Tzanetatos has been previously profiled in the Opalesque Futures Intelligence on February 24, 2011 regarding his macro outlook. [http://www.opalesque.com/OFI1214/Manager_Tzanetatos_a_CTA_from_Greece_talks214.html]

"The problems in Greece are not specific to Greece," said the Greek born and now Chicago-based fund manager trading the Global Titan CTA Program, a discretionary global macro diversified managed futures program.  Mr. Tzanetatos is credited with coining the term "volatility clustering" and has delivered conference speeches on the topic as it pertains to long run Kondratieff wave cycle macro economic analysis.

Kondratieff's wave cycle, attributed to the Russian born economist of the same name, theorized  in his book The Major Economic Cycles (1925) that capitalist economies are prone to high performance volatility and long cycles averaging 40 - 50 years.  According to Tzanetatos, the world is in a state of flux and Greece is only part of that flux.  The economic system needs to cleanse itself, it needs a fresh start." 

When Mr. Tzanetatos says "cleanse" it's time to get to the thorny point of the problem.  Does he mean forgive a debt that hangs over the society as interest rates run literally near loan shark levels?

"The Western world has lived the high life, we have become accustomed to entitlement," the founder of CTA Global Titan observed.  "In Greece labor laws make firing someone from a job almost impossible.  Entitlements and bureaucracy dominate the landscape. The laws of nature, the system, are telling us it needs to change.  We have engrained in our heads a social safety net.  We are like an aristocrat who goes poor and is shunned by his 'friends.'  However, 'kicking the can' might need to come to an end." 

While Greece has unique peculiarities, at the core the problem isn't that much different from that of the United States.  "Greece learned about leverage and monetization from the United States," Mr. Tzanetatos noted.  

At this point we might note the US currently running deficit spending to the tune of over $1.5 trillion each year.  [http://www.bloomberg.com/news/2011-03-10/u-s-had-record-222-5-billion-monthly-budget-gap-in-february.html ]  In three to five years seniors will retire in significant numbers, drawing on Social Security benefits that have been spent. [http://www.businessweek.com/magazine/why-the-debt-crisis-is-even-worse-than-you-think-07272011.html] These events could collide with a rise in interest rates.  In other words, on a mathematical basis, the future the US faces is just as precarious as that of Greece.  Dealing with this problem could bring about extended market volatility, potentially triggering significant market price trends at some point.  Solving the problem requires creativity and looking at both investing and financial solutions from a different perspective.

One significant difference between Greece and the US, Mr. Tzanetatos noted, was US entrepreneurship.  "In 10 years I wouldn't be surprised to see the US independent of Middle Eastern oil.  This country has a DNA based on developing new solutions and paradigm shifts.  There is not much of a dependence on a safety net."

In the short term Mr. Tzanetatos noted the need for European banks to bring all their toxic loans on the balance sheet and deal with them.  "The banks are not well capitalized.  This is a systematic issue." 

The longer term is a different story that only those with a desire to understand the reality of the situation might care to address.

While Mr. Tzanetatos work may sound difficult for an investment manager to handle, one might remember that market environments that feature price persistence, price dislocation and price volatility offer opportunities for investments un-hinged to economic strength.



 
This article was published in Opalesque Futures Intelligence.
Opalesque Futures Intelligence
Opalesque Futures Intelligence
Opalesque Futures Intelligence
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Albright Capital builds on emerging markets impact strategy, signs on to IFC principles[more]

    Bailey McCann, Opalesque New York: Albright Capital has adopted the International Finance Corporation's Operating Principles for Impact Management. The firm has also developed its own impact measurement system as part of the implementation of the principles. The IFC's principles were

  2. Investing: Hedge funds getting burned as growth stocks trounced by value, Why investors are prioritizing health care in a big way, Fannie, Freddie soar as hedge funds score wins on two fronts[more]

    Hedge funds getting burned as growth stocks trounced by value From Bloomberg: A hedge-fund favorite is rapidly losing ground in the stock market just as one of the industry's least-loved sectors picks up. Growth stocks, generally companies that are seeing rapid profit increases, have drop

  3. PE/VC: Supersized unicorn: Root Insurance leaps to $3.65bn valuation with $350m round[more]

    Root Insurance is now valued at $3.65 billion after a $350 million funding round - the largest single venture capital round ever in the state. The 3-year-old auto insurer, now the startup with the highest valuation of any in Ohio, has raised a cumulative $523 million in VC and another $100 mi

  4. Testing hedge performance when stocks crash[more]

    Bonds have historically been a reliable buffer for stock exposure. But low yields and potential reversion to a more positive stock/bond correlation would likely translate to less protection. Gold has been a solid crisis hedge but has experienced long stretches of negative inflation-adjusted returns.

  5. PE/VC: The FBI is investigating a venture capital fund started by Peter Thiel for financial misconduct, Why venture capital firms need more women partners and entrepreneurs[more]

    The FBI is investigating a venture capital fund started by Peter Thiel for financial misconduct From Vox: Federal investigators are probing the conduct and practices of Mithril Capital, a venture capital firm co-founded by Peter Thiel, Recode has learned. US officials - including t