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What happens when Greece defaults
It is when, not if.
Financial markets merely aren’t sure whether it’ll be tomorrow, a
month’s time, a year’s time, or two years’ time (it won’t be longer
than that). Given that the ECB has played the “final card” it employed
to force a bailout upon the Irish – threatening to bankrupt the
country’s banking sector – presumably we will now see either another
Greek bailout or default within days.
What happens when Greece defaults. Here are a few things:
- Every bank in Greece will instantly go insolvent.
- The Greek government will nationalise every bank in Greece.
- The Greek government will forbid withdrawals from Greek banks.
- To prevent Greek depositors from rioting on the streets, Argentina-2002-style (when the Argentinian president had to flee by helicopter from the roof of the presidential palace to evade a mob of such depositors), the Greek government will declare a curfew, perhaps even general martial law.
- Greece will redenominate all its debts into “New Drachmas” or whatever it calls the new currency (this is a classic ploy of countries defaulting)
- The New Drachma will devalue by some 30-70 per cent (probably around 50 per cent, though perhaps more), effectively defaulting 0n 50 per cent or more of all Greek euro-denominated debts.
- The Irish will, within a few days, walk away from the debts of its banking system.
- The Portuguese government will wait to see whether there is chaos in Greece before deciding whether to default in turn.
- A number of French and German banks will make sufficient losses that they no longer meet regulatory capital adequacy requirements.
- The European Central Bank will become insolvent, given its very high exposure to Greek government debt, and to Greek banking sector and Irish banking sector debt.
- The French and German governments will meet to decide whether (a) to recapitalise the ECB, or (b) to allow the ECB to print money to restore its solvency. (Because the ECB has relatively little foreign currency-denominated exposure, it could in principle print its way out, but this is forbidden by its founding charter. On the other hand, the EU Treaty explicitly, and in terms, forbids the form of bailouts used for Greece, Portugal and Ireland, but a little thing like their being blatantly illegal hasn’t prevented that from happening, so it’s not intrinsically obvious that its being illegal for the ECB to print its way out will prove much of a hurdle.)
- They will recapitalise, and recapitalise their own banks, but declare an end to all bailouts.
- There will be carnage in the market for Spanish banking sector bonds, as bondholders anticipate imposed debt-equity swaps.
- This assumption will prove justified, as the Spaniards choose to over-ride the structure of current bond contracts in the Spanish banking sector, recapitalising a number of banks via debt-equity swaps.
- Bondholders will take the Spanish Banking Sector to the European Court of Human Rights (and probably other courts, also), claiming violations of property rights. These cases won’t be heard for years. By the time they are finally heard, no-one will care.
- Attention will turn to the British banks. Then we shall see…
What happens when Greece defaults. Here are a few things:
- Every bank in Greece will instantly go insolvent.
- The Greek government will nationalise every bank in Greece.
- The Greek government will forbid withdrawals from Greek banks.
- To prevent Greek depositors from rioting on the streets, Argentina-2002-style (when the Argentinian president had to flee by helicopter from the roof of the presidential palace to evade a mob of such depositors), the Greek government will declare a curfew, perhaps even general martial law.
- Greece will redenominate all its debts into “New Drachmas” or whatever it calls the new currency (this is a classic ploy of countries defaulting)
- The New Drachma will devalue by some 30-70 per cent (probably around 50 per cent, though perhaps more), effectively defaulting 0n 50 per cent or more of all Greek euro-denominated debts.
- The Irish will, within a few days, walk away from the debts of its banking system.
- The Portuguese government will wait to see whether there is chaos in Greece before deciding whether to default in turn.
- A number of French and German banks will make sufficient losses that they no longer meet regulatory capital adequacy requirements.
- The European Central Bank will become insolvent, given its very high exposure to Greek government debt, and to Greek banking sector and Irish banking sector debt.
- The French and German governments will meet to decide whether (a) to recapitalise the ECB, or (b) to allow the ECB to print money to restore its solvency. (Because the ECB has relatively little foreign currency-denominated exposure, it could in principle print its way out, but this is forbidden by its founding charter. On the other hand, the EU Treaty explicitly, and in terms, forbids the form of bailouts used for Greece, Portugal and Ireland, but a little thing like their being blatantly illegal hasn’t prevented that from happening, so it’s not intrinsically obvious that its being illegal for the ECB to print its way out will prove much of a hurdle.)
- They will recapitalise, and recapitalise their own banks, but declare an end to all bailouts.
- There will be carnage in the market for Spanish banking sector bonds, as bondholders anticipate imposed debt-equity swaps.
- This assumption will prove justified, as the Spaniards choose to over-ride the structure of current bond contracts in the Spanish banking sector, recapitalising a number of banks via debt-equity swaps.
- Bondholders will take the Spanish Banking Sector to the European Court of Human Rights (and probably other courts, also), claiming violations of property rights. These cases won’t be heard for years. By the time they are finally heard, no-one will care.
- Attention will turn to the British banks. Then we shall see…
6 comentarii :
Nu stiu daca ai vazut cele de mai jos. E sinistru !
http://www.hotnews.ro/stiri-esential-8735516-interviu-exclusiv-viorel-isticioaia-budura-romanul-care-dirijeaza-relatiile-uniunii-europene-china.htm
Am o cerere de card de credit la o banca greceasca de aproape o luna si n-am primit nici un raspuns,desi valoarea este f mica.
E clar ca le este frica sa mai dea credite
"- Every bank in Greece will instantly go insolvent."
E un agent pro-chinez, pus acolo cu acordul României. Studii superioare în China, sau o parte, cel puţin.
Când era ambasador în China, făcea propagandă pro-chineză:
Interviu cu Ambasadorul României în China, Viorel Isticioaia-BuduraCum şi-a uitat România "prietenul chinez"
Se duc naibii băncile greceşti.
Aha. Tipul se autocompara cu Eminescu :
"V.M.: Cititorii HotNews va vor spune ca aveti nostalgii comuniste...
Viorel Isticioaia-Budura: Asta ar fi o acuzatie extrem de grava la adresa lui Eminescu."
Da, e clar ce se va intampla cu bancile grecesti
Mai grav este că UE joacă cu China în domenii strategice, cum ar fi programul de sateliţi militari Galileo, program "vândut publicului" drept unul civil, "GPS-ul european". În caz de razboi, SUA poate bloca GPS pe teritoriul inamic, ori denatura datele. Ruşii au deja sistemul Glonass, inferior ca precizie şi acoperire pe teren.
Asta este , de fapt cel mai grav lucru !
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