Early June Grexit? (May 27th 2012)

From May 27th 2012

It could be a rather nervous week for the markets. There are already rumours of a Grexit next weekend, and we also have the effects of the Spanish Bankia nationalisation to wash through:

‘The comments came amid rumours – detailed by the bank of Tokyo Mitsubishi-UFJ – that a Greek exit is now imminent. The bank said there was speculation that a “planned departure” would take place over the weekend of June 2 and 3.’


What else do we have?

– Germany is still sticking with the ‘no Eurobond’ line:

“We’re not willing to pour money into a bottomless pit,” German Interior Minister Hans-Peter Friedrich told newspaper Leipziger Volkszeitung.

– The ‘only topic of discussion in Spain is whether to switch to a German bank’ (Niall Ferguson interview):


– The Greek polls have suggested a ‘no austerity’ result although the latest poll does hint at the fact that that it’s stil not a done deal:


– The Greeks themselves are withholding tax payments as they think it will be better to pay in drachma. In other words money may run out before the June 17th election, especially if the slow bank run continues.

– Large insitutions (e.g. Lloyds) have already prepared systems for multi-currency transactions:


– The Eurocrats ‘big idea’ is a pan-European deposit guarantee scheme but that could take weeks to sort out. Even then there is no guarantee that it will save the Euro from ‘contagion’:


I am expecting a pretty volatile week ahead. My overall sense is that the markets and people may not wait until June 17th to resolve the Greece issue.

It’s now Spain that we really have to worry about.

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