OT China and Geeece

not completely OT but not actionable. because there is no past data on this, no way to figure the odds

Maulden’s thoughts on Greece and China also a bunch on secular bear vs secular bull, which I mostly ignored. A rose is a rose sort of thing.
Markets are what they are. We are in the traditional (and data backed)Summer doldrums.

I have just started some general market hedging (via long term QQQ put options) in a very small way, but at this point plan to increase it substantially next Spring, assuming it all holds together that long. While not in themselves fatal to US markets , bear markets in major economies (not Greece but China) are not healthy for US markets.

So only for background info

Greece – if this deal is agreed upon, it simply postpones the crisis for a period of time, as Greece simply has no way to grow itself out of its debt dilemma. And it is not altogether clear that Tsipras can hold his coalition together, given the referendum. He might actually need the opposition to get this deal passed, which becomes problematical for him, as it might force him to call an election. But the banks would open, and Greek life would go on until the Greeks run out of money again in the sadly not-too-distant future, as there is no way on God’s green earth they can meet the growth requirements that this deal demands.
The monetary union is an absurd creation based on political hopes, not economic reality. Politics can keep it together for longer than it should otherwise exist, but unless the entire southern periphery of Europe turns German in character, the peripheral nations are going to suffer under a monetary policy not designed for their economies. That ill-fitting economic straitjacket is going to mean slower growth and higher unemployment and fiscal instability. How long will they endure that? So far, a lot longer than I thought they could, 15 years ago.

China – I wonder if all the major indexing firms are happy with their recent decisions to include China as a major portion of their indexes, given that liquidity in their markets is available only when markets are going up. Just curious, but how in the Wide, Wide World of Sports do you price or even maintain an index if you can’t sell and have daily liquidity and price discovery? If 7% of your index is based on a valuation that is not real, what price do you then base daily liquidity on?