Greek debt worries part II, UK general elections and a note on Citigroup (C)

BARC 338.25p 24.05p (-6.64%)

CAU 50.50p -0.00p (0.00%)

CRWN 30.00p 0.00p (0.00%)

FPER 5.00p 0.00p (0.00%)

FCCN 39.00p -2.00p (-4.88%)

GAR 1.75p 0.00p (0.00%)

ICA 89.5% 0.00p (0.00%)

JKX 262.00p -8.00p (-2.96%)

LLOY 66.13p -2.35p (-3.43%)

LLPE 60.75p +1.25p (+2.10%)

MAI 158.00p +6.00p (+3.95%)

QQ. 127.50p -6.00p (-4.49%)

RBS 54.35p -1.45p (-2.60%)

UNG 3.25p 0.00p (0.00%)

The Greek debt crisis is still having an extraordinary effect on the markets this week. Standard & Poor's downgraded Greece's sovereign debt rating to junk status because of the increased likelihood of default on their huge debt. This will make it harder the them to service their huge deficit. Spain and Portugal were next to have their ratings downgraded for similar reasons. However, their situation is much better. BARC holds about €15bn of Greek debt, which probably explains the reason that it's shares went down quite a distance more than other banks.  The other reasons are that the first quarter profits from BarCap is less than analysts expected and the it is less impressive than it's peers. LLOY and RBS had hardly any exposure to the debt, which is a good thing. The UK banks' exposure is nothing compared to France and Germany's exposure. If Greece does default then it would be a disaster to the eurozone economies in general, which may make the markets nervous wordwide. However, this presents a good buying opportunity for the contrarian investor [like other crises in general] if one know what companies to look for. The eurozone members would have to bail the Greeks out for economic and political reasons, with the latter more important.

Will the UK get a hung parliament? Who knows? I believe that the Tories have a massive advantage over Labour and the Lib Dems for a number of reasons, such as their experience in tackling the last recession in the 80's and the tendency of voters to pick them as their first choice over the Lib Dems in many constituencies [even though they are not the first choice in terms of voter number nationwide - this is why the latter want the election rules changed]. More importantly, if the next government cannot get the reforms through in order to reduce the budget deficit then the UK may be in big trouble. They may have their sovereign debt rating downgraded causing a potential panic in the markets. They may even end up in the same league as the Ireland, Portugal and Spain.

I notice that Citigroup (C) has done well in the first quarter and many sources such as this say it is a good time to buy the stock. While I personally have no problem with that in general, I want to provide a more detailed research whether the stock is really a good buy or not. While it is not a true contrarian stock at the moment, except in P/BV terms, it may be a good buy in many respects. Looking at the general good first quarter profits the banks enjoyed so far, I know the reasons that investors want to buy into Citigroup. My portfolio gain is now about 15% now and this may get worse before it gets better. I better sit tight and don't panic like sheep.