Y’all, keep a close eye on Greece this weekend. It’s looking very serious.
I’ve been watching the Greek bonds for days. The 1yr is sitting at 97.96% and the news is swirling with rumors of default, rumors of denial of default, rumors of failed auctions.
I know to many, who have no idea what this means, the instinctive reaction is to think that what happens waaaay over in some tiny Mediterranean island has dick-all to do with us. Fight that instinct, because it is wrong. German banks are in dire danger from the fallout of a Greek default – Merkel is frantically sandbagging as we speak. The big French banks were already in deep trouble, and I’m talking CEO-eats-a-bullet style of thing.
The big deal with a global marketplace is that we’re all now tied together, much like slaves chained in the hold of a ship. Toss one slave over, and the weight will drag everyone else down too. No where is this more pronounced than the financial sector.
My read on this, which may of course be wrong, but unless you’re willing to put as much research into it as I have, you’d be a fool to dismiss out of hand:
Greece can’t be saved. There’s no way. Even if the world could find the funds, and Greek citizens could find the balls to fix their problems, it’d be a bad precedent because Italy is likely next on the chopping block and they’ll expect global bailout as well (Hey, Greece got bailed out, why not us?) TBTF is an idiotic concept when applied to banks, the impossibility of the theory is exponentially greater when applied to whole countries.
It might be able to be sandbagged. Detach, de-lever, cordon off the damage and sit tight for the ride. If they do this, they still can’t save the French banks in the long run (too exposed, and to more crap than Greece) but they might be able to salvage enough of the German economy and the Euro to withstand some major shitstorms.
If everything goes perfectly, this weekend will be a nailbiter but come Monday it will be business as usual hereabouts. For now. Not so much for Greece, but we’ve known that for a long time.
If nothing goes right, US banking is going to be mass chaos on Monday morning. Grab your sack with both hands.
Plan for the worst and then you can hope for the best.
