Tue, Aug 3, 2021
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. Distressed-debt funds get no love as credit problems disappear[more]

    From Bloomberg: Private debt investors are turning away from distressed funds amid shrinking opportunities to profit from troubled companies. Investors were less keen to put their money to work in funds that target distressed credits in the past quarter than a year ago, according to a poll of

  2. Investing: Cathie Wood's Ark Invest abandons Chinese tech stocks amid regulatory crackdown[more]

    From Business Insider: Cathie Wood's Ark Invest has slashed its exposure to Chinese tech stocks amid an ongoing regulatory crackdown, according to Ark's daily trading updates. Ark's flagship Disruptive Innovation ETF has seen its exposure to Chinese stocks fall to less than 1% from a high of 8

  3. SPACs: SEC abruptly kills Ackman's controversial SPAC plans, Bill Ackman rejigs Universal deal after regulators probe SPAC plan, SPAC-ing the Southeast Asia story, SPAC deals will rebound for remainder of 2021[more]

    SEC abruptly kills Ackman's controversial SPAC plans From Institutional Investor: The Securities and Exchange Commission has killed Bill Ackman's special purpose acquisition company's complicated plan to invest in Universal Music Group. On Monday, his SPAC, Pershing Square Tontin

  4. New Launches: Apollo investors look past Black-Epstein tie to back impact fund, Leeds Equity closes in on $1.25bn for its seventh buyout fund, Schroders Capital surpasses $389m for its fifth European infrastructure senior debt fund, Neuberger Berman closes NB Private Equity Impact Fund at nearly $280m, HSBC AM launches fintech venture capital strategy, Slate rounds up close to $600m for first credit fund, Trifecta Capital raises $130m for close of VC fund, Lumira Ventures closes on $255m of new capital to build transformative healthcare companies[more]

    Apollo investors look past Black-Epstein tie to back impact fund From Bloomberg: The backlash against Apollo Global Management Inc. over Leon Black's ties with sex offender Jeffrey Epstein is waning, with investors lining up to entrust the firm to manage investments dedicated to social

  5. Investing: Tiger Global: The technology investor ruffling Silicon Valley feathers, Addepar raised $150m from hedge fund D1[more]

    Tiger Global: The technology investor ruffling Silicon Valley feathers From FT: For the first 15 years of running Tiger Global Management, Chase Coleman wore a suit every day in the hopes that investors would look past his inexperience. Today, his firm faces a different kind of reputat