Back in Greece, the president is trying to form a unity government, of which Alexis Tsipras, the firebrand youth does not want to be a part of. From the pictures I see, he swoons around like the power broker and says things like, 70 percent of Greece voted against austerity. Yes, but just less than 17 percent of the electorate voted for your party, meaning that as far as I can tell, 83 percent of the voters did not vote for his party. But this is the key part, last evening these were comments made by Eurogroup president Jean-Claude Juncker after the meeting of the European finance ministers on talks about Greece and the Euro. To find all of the comments from this Reuters story: HIGHLIGHTS – Comments from euro zone finance ministers and officials.

“I made it perfectly clear that nobody was mentioning an exit of Greece from the euro area. I am strongly against. We are 17 member-states being co-owners of our common currency. I don’t envisage, not even for one second, Greece leaving the euro area. This is nonsense, this is propaganda.

We have to respect Greek democracy. I’m against this way of dealing with Greece, which consists in provoking the Greek public opinion and giving advice and indications to the Greek sovereign. Greece has voted, we have to take into account the result. We do hope that a government will be formed in the next coming days or weeks and then we have to deal with that government. We don’t have to lecture Greece.

But the Greek public, the Greek citizens, have to know that we agreed on a programme and this programme has to be implemented. But I don’t like the way of dealing with Greece, those that are threatening Greece day after day. This is not the way of dealing with partners, colleagues and friends and citizens in the European Union.”

Oh! Propaganda and nonsense.

I can see where he is going with all of this. I agree that for Greeks in the long run there is going to be a whole lot of pain. But that is better than reverting to the old currency. But the Greek people have spoken. I suspect that in the short term we will see commitments being made by the Greeks (once they form a government) and by the Eurozone to one another.

And perhaps concessions on both sides, to admit too much austerity is not too helpful, but equally that fiscal discipline needs to be maintained in order to stay inside of the zone. That is the result that I am looking for, a concession from both sides. Oh, and meanwhile Hollande is sworn in today and his first visit is off to Berlin tonight.

No guesses to what they will be talking about. France and austerity, Spain and their bond yields, Greece and errr… lots of issues, Italy and our friend Mario. All in German no doubt, Francois Hollande can speak German fluently is what a guest on CNBC Europe said this morning.

Sashsa Naryshkine of Vestact

What next for Greece? Well, there seems no chance of a coalition government in Greece, or little chance, so fresh elections are coming. The central bank governor of Belgium reckons that it is OK if Greece wants to make that decision. It all comes down to the money. The politicians can say that they have the peoples mandate, but I think that their (the peoples) emotions probably do not translate to wanting to exit the Euro.

File that in the drawer of unintended consequences. But, austerity sucks. There were Spanish people protesting over the weekend, and Germans protesting by voting Angela Merkel’s party out of power in some regional elections over the weekend. Elections on the weekend, that is how it must be done. These regional elections are important, because we can see that even the common German folk are sending a signal.

But instead of voting in fringe parties, the democrats and greens in Germany are starting to make progress. So you see, even though the German government is pressing Greece and Spain hard, the truth is austerity sucks.

There is a EU Finance meeting today. Guess what is on the agenda, Greece of course. And Spain. And later, investors get to vote themselves with a bond auction for Italy today.

The Italians are not too excited about being compared to the Spanish and in theory this is true, the two countries are very different economically, if not geographically. Germany, France and Spain also have debt auctions today, this has become almost as exciting as watching the various football leagues come to a conclusion. So the noisy neighbours eh? I am pleased for them, and their Italian coach, Italy is winning! And Greece is too, Olympiacos Piraeus, a basketball team from Athens won the Euro league yesterday. But, we wait for the outcome of these talks today and how much the Greek people want, or do not want the European money. Because for me, that is what it comes down to, accepting the money in return for further reforms and cutting of a bloated public sector, and just another chance to stay afloat. All of these hard decisions are not for me to decide.

So the open debate of the Greek elections has captured every watcher and participant this week, the Greek stock market has plunged to the worst levels in 20 odd years, probably a whole lot worse on an inflation adjusted basis. Perhaps my review of the situation was a little alarmist yesterday, but there are many that share my view, being a member of the Euro club is far better than being out, check out this Economist piece: The euro crisis – No way out. You see that analysis, the second paragraph? Yip, whilst being out might be a good idea at the time, being in is better.

Spain was also feeling a whole lot of heat yesterday, the equities market was off heavily, around three and a half percent, the bond yields had spiked through six percent and there were serious worries about the new plan to inject liquidity into Spanish banks. Excuse me for thinking this is a slow motion repeat of the part nationalisation of the American banks European style. They are a bit slower and a whole lot more bureaucratic, but eventually the job gets done. Spain is in the process of organising a program to inject new capital into their banks. Last evening basically the state through a fund named Frob (what kind of a name is that) took a 45 percent stake in the nations third largest bank, Bankia. By basically converted state funding to equity, this is not the first (the 8th as far as I understand it), but the biggest, ten percent of bank deposits in Spain. The Spanish stock market is at its worst level since the end of 2003. Sigh. At the same time German bund yields dropped to their lowest level ever, signalling that Europeans trust the Germans, and nobody else. No wonder the Germans continue to drive this line, but I am sure that they will start to share the view of the new French president, austerity is not everything.

As a result on this side of the world (Paul told us the other day that only ten percent of the global population live in the Southern Hemisphere, I feel lonely) we saw equity markets sell off, we had started well enough, but quickly slid. The Jozi all share index closed at 33434, down 113 points or 0.34 percent on the day. Banks sank three quarters of a percent, industrials lost around the same amount, resources, perhaps thanks to a weakening Rand added just over half a percent. Gold miners added a whopping two and a half percent.

Sasha Naryshkine of Vestact.

Massmart with a whole lot of announcements this morning, firstly a trading update, this is for 44 weeks to end 29 April, so literally ten days or so ago. Total sales for the group at this stage clocked 51.7 billion Rand (FY 2011 sales were 52.950 billion ZAR and FY 2010 sales were 47.451 billion ZAR), which is an increase of 14.7 percent over a prior period, 44 weeks. Kind of a strange sales update, but I guess the nature of retailers is that the work never really ends, you can pretty much in the urban areas of Gauteng shop at any retailer on any day of the week. Even public holidays. There are very few days of the year where shops are shuttered for business, especially up here in Joburg, I pretty much think that shoppers expect that. And I guess in a way it stimulates our economy, meaning that there are more working hours in which economic activity takes place.

And cheaper too. You have heard me say this a number of times too, where I quote Warren Buffett’s right hand man, Charlie Munger say that he thinks Costco has done more for society by keeping prices low and by function inflation low, than any other philanthropic cause he knows. And he is right you know, the consumer is always right.

Straight into a divisional sales update, Massdiscounters clocked total sales increase of 10.6 percent (3.8 percent comparable) with inflation of negative 3.8 percent. Price deflation? Prices of a similar item going down is not altogether a good thing for the retailer, but this is certainly good news for the consumer. Margin management is far easier when prices are going up Paul weighed in, this is very true. But you can’t charge people more for that bag of rice when the underlying soft commodity price is trending in the other direction. And with regards to some electronic goods, which tend to get cheaper and not more expensive, the big black box discounters struggle there. Think Best Buy.

Masswarehouse saw amazing growth with total sales growth up 19.3 percent, comparable growth sales up 11.2 percent and price inflation a modest 1.8 percent. Across at the Massbuild division, encouraging signs that the building activity and home improvement activity is on the mend (just try and get a parking at a Builders Warehouse on a Saturday morning) with total sales 11.9 percent better, comparable sales 8.2 percent stronger and inflation a very modest 1 percent. At the other division, Masscash saw sales increase by 15.6 percent, comparable sales increased 11 percent with inflation in that division up by 6 percent. Interesting that the food, liquor and groceries warehousing divisions experienced the highest inflation, but that would make sense.

So, on balance I am pleased with the sales update at this point. The market however is not as happy as I am. The stock is down over two percent, which is more than the rest of the market. So, I guess you have to be with Mr. Market on this one. Then next there is a management shuffle at Massmart, not so much a shuffle rather than a strengthening of the team. The current CFO, Guy Hayward will become Chief Operating Officer (a newly created role) and report top Grant Pattison, the current CEO. Pattison is set to (as per the release) “focus on Massmart-Walmart’s strategic growth priorities for South Africa and Africa, including the implementation of the Group’s Retail Food strategy.” So, are we going to see more Game Foodco’s and Cambridge Foods? Yes, I am guessing yes. And not just here, elsewhere in Africa too. Lastly the Chief Financial Officer role will be assumed by Ilan Zwarenstein, who has been Group Finance Executive at Massmart since 2006. Experience all around. They are bolstering the board here in anticipation of growth. And that probably means more people are going to be hired. Anyone listening out there? Byron is listening, he is checking out Massmart today and will return with some good investigating in due course. I look forward to it.

The views are those of Sasha Naryshkine of Vestact

Oops. I was wrong. I thought that Mr. Sarkozy would have pipped Francois Hollande and retained the French presidency. Oops. Sarkozy has conceded defeat. And with that, Hollande now needs to make new friends. I am pretty sure that more than a cursory telephone call has taken place between himself and Angela Merkel already. But this is, how should we say, not the best news, political instability. It will matter immediately what Hollande does to calm markets, to say that he will stick to the plan. All we have to do is wait and see, but now you know, the socialists are back in charge in France, at least of the presidency. If you have a look at the Senate and National assembly, it is still the Union for a Popular movement that holds the edge. But guess who is leader of that party? Nicolas Sarkozy. Well, excuse me for thinking out loud here, but probably not for much longer. Time to go and change diapers I am guessing. Eish, not good, but I guess the French have spoken, and the right of centre in France has a lot of soul searching to do now. And the socialists, well, they will be dancing. Ugghh.

There were results from the folks over at MasterCard, it looked like a beat to me, versus consensus, but the stock fell in ordinary trade. Payment systems companies, some folks are starting to get excited about eBay because of course they own PayPal. The precursor to PayPal of course had names like the South African Elon Musk (who now is into fast electric cars) and Peter Thiel (who is perhaps the smartest Facebook investor, he bought 10.2 percent of the company as an angel investor back in 2004), but those two have since made money elsewhere. We prefer Visa (ha-ha) as an investment, the stock took some heat afterhours with an announcement that coincided with their earnings release, and a US anti-trust investigation.

So, Visa had results post market yesterday, here is the full release here:Visa Inc. Posts Strong Fiscal Second Quarter 2012 Earnings Results. EPS of 1.60 Dollars per share, which was a beat of ten cents per share, and a dividend of 22 US cents per share. Net income increased 23 percent when compared to the prior year to 1.1 billion Dollars, with GAAP net operating revenue higher by 15 percent to 2.6 billion Dollars. Total transactions processed were a whopping 13 billion, which was 8 percent higher. Or, 141.3 million transactions per day. I said to Byron that does not sound like a lot really, and he pointed out that 85 percent of all transactions globally are still in cash. WHAT? And which way do you think the regulators want this to move? Electronic payments will tell you everything that you want to know of course, all governments from a safety point of view. There is a holding cost of cash.

What I found quite interesting is this line: “International transaction revenues, which are driven by cross-border activity, grew 17% over the prior year to $733 million.” Cross border activity? That means that people are buying stuff from other countries and using Visa’s secure network. Or, tourists are using their debit and credit cards for buying stuff or services, trusting the network more and more. Which is interesting in a way I guess, but not surprising really. 17 percent? And as we said, look at that, still there are many cash transactions. And strangely, as they mention on their website: “70 percent of Visa payment transactions in the United States are not credit, but debit and prepaid” So, folks are transacting in electronic “cash” transactions.

Back to these results, which were a beat of course, and guidance for the full year which was as follows: “Annual net revenue growth in the low double digits”, I read that as around 12 to 13 percent or so. Perhaps higher. Marketing expenses under 1 billion Dollars looks a little high, bearing in mind that the quarterly marketing expense ran at 170 million Dollars. Just looks “high”, but perhaps just guidance. As ever there are always risks, they spell it out, rules capping the charges and further government “reforms”. And then Visa talks about economic conditions like European sovereign issues, other global “problems” and currencies are also an issue too. On balance, the stock forward looks cheaper than MasterCard, and we will continue to accumulate shares of the major electronics payments system globally.

Parting shot. Dumb, dumb, dumb. Stupid, stupid, stupid. Nobody I read so far this morning thinks that the Argentinean government taking a 51 percent stake in oil company YFP is a good idea. Let me rephrase, the Argentinean government in nationalising 51 percent of YFP and thereby taking control away from Spanish oil company Repsol. Repsol will now own just 6.4 percent of YFP, as they lose 51 percent. Argentina is going to throw a few Peso’s in Spanish companies Repsol’s direction. How many state owned entities are there in the USA? They helped the banks and the motor manufacturers only because they had to, the stock has been sold off, in some cases for a sizeable gain. But Argentina is not nationalising YFP because they need to help the company. They are doing this because their own internal finances are in a bad place. 100 years ago they had the world at their feet, but for various reasons, political wrangling and personalities, Argentina lost their way, and the USA won.

So why are Argentina scrambling? Well, since the incumbent won a landslide victory last year, as the FT reports, the countries macro accounts are worsening. So, they are in short looking for extra revenue streams. And in their view, Argentina, Repsol has just been milking a national asset. No guys, those dinosaurs and ancient forests were there long before humans were there, this is where the oil comes from. Bloomberg has this take: Argentina Seizes 51% of Oil Producer YPF to Stem Imports.

The imports of oil are as a result of the Argentinean government putting a cap on export prices, you can’t get market prices. So naturally nobody is going to push the envelope from a production point of view. Another disaster in the long line of Argentinean economic meddling. Economists are not even allowed to question high inflation numbers. Yeah, good luck with this, I bet….. in the next half a decade, you will see another credit event, as once again governments prove that they are not able to control economies and resort to desperate measures. Buyers of Argentinean bonds? Venezuela! Crazy. This is going to end badly again for Argentina.

The views expressed are those of Sasha Verashkine of Vestact.