Monday, 6 July 2015

Greece - a few observations...and where do we go from here?

Whilst the Chinese market is pretty volatile (and Hong Kong is having its worst day since late 2011)...the focus inevitably is Greece.  So...some quick observations:

  • Lots of talk - a meetings fest over the next couple of days...but without Mr Varoufakis who has resigned.  More on that below...
  • The Greek banks cannot open without explicit ECB/ELA - I called it on Twitter yesterday the 'highest level of financial game theory now' - and this opens up a route for a compromise despite the 'no' nature of the vote;
  • Grexit? - still only a 40% chance.  Because inherently the Greeks still prefer the stability of the euro versus the old drachma;
  • A deal - has to include a bond restructuring otherwise it is not worth the paper it is written on.  This is very much a continuation of the view I gave in last Monday's Yahoo Finance Contributors column (link here);
  • Contagion? - got to take the issue off the front pages - hence the need for a compromise;
  • Mr Varoufakis - certainly his aggressive style has alienated some BUT his resignation I believe indicates a compromise is in the air
More in a further posting later...


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