There’s a new movie coming out called “Contagion.”
It’s about a disease that travels really fast on the back of our globalized world. As it spreads across the Earth, it brings death and destruction. It reshapes the world as we know it.
Hmmm. That sounds a little too familiar, don’t you think?
If you were to simply replace the planes, trains and automobiles with capital… substitute the disease with Greek debt… and you have a block buster with very real potential to change our world.
After all, the flow of capital across sovereign lines is so effortless that showing one’s support for a nation is as simple as a keystroke. Of course, the opposite is true…
Expressing distrust for a nation is also simple… as the Greek banks, the Greek nation, and the large European banks are all figuring out. Unfortunately, once confidence is gone, it’s hard to rebuild.
Right now, capital is flowing out of Southern Europe only a half-step behind confidence. It’s easy to see. The one-year Greek government bond is yielding almost 180%. That’s right, 180%. That means that a one-year Greek government bond sells for just over 50 cents, and matures in one year for $1.00.
The catch is, the Greek government has to actually make good on its promise to pay.
Who believes them?
Not the market. Hence the 100% yield.
As we’ve been telling our Boom & Bust subscribers, Greek is already essentially in default.
The problem is, Portugal, Spain, Italy, and Ireland are now showing the same progression of symptoms Greece has done since the beginning of the Euro Debt Crisis. This contagion is spreading and in the August issue of Boom & Bust we gave subscribers a way to profit from these events.
If you’re not yet a subscriber, you can sign up right now. In the meantime, look to short the banking sector for quick gains as the contagion breaches American shores.
Until next time,
Harry and Rodney
P.S. A key survival component during any financial crisis is keeping a steady cash flow going. One way to do this is to trade currencies, especially now that the Greek contagion is making the currency market volatile. Yes, volatility can be dangerous, but when you use the 8 minute profit windows that typically pop up in the market up to 14 times a day, you’re limiting your risk while maximizing your profits. A colleague of ours, Tom Gregory, can give you more details[TB2] .