Posts Tagged ‘Greece’

U.S. stocks fell nearly 2 percent or more on Monday, following a decline in global markets on the escalating Greece debt crisis.

dow-29jun2015

Dow down -350.33 over 5 days.

“I think the uncertainty around Greece is just making people skittish and we haven’t had a meaningful pullback for some time,” said Ben Pace, chief investment officer at HPM Partners. “It’s hard for anybody to fight this uncertainty.”

“It should be a reasonably isolated situation but we don’t know that for sure,” he said.

Stocks extended losses in late-afternoon trade as Greece Prime Minister Alexis Tsipras said the stronger the rejection of the creditor deal, the stronger the Greek hand in the talks. He added that the aim for the referendum is to bring continuation of negotiations with lenders.

S&P downgraded Greece to “CCC-” and said in a Reuters report that the probability of the country exiting the euro zone is now about 50 percent. Earlier, a Greek official told Reuters in midday trade ET that the country will not pay its loan due to the International Monetary Fund on Tuesday.

Full Story @ [Yahoo News]

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Greece Announces Bank Holiday

Posted: June 28, 2015 in Economics
Tags: ,

As Greece inches closer to a financial default, the government closes banks and initiates capital controls. Sean Carberry reports.

Greek PM Alexis Tsipras has announced a referendum in a televised speech to the nation after another day of fractious negotiations with creditors closed without a deal. The government is considering a referendum on the substance of the proposal from the creditors.

The dramatic move comes after Athens rejected a proposal from the troika aimed at delivering some €16 billion in aid to Greece as part of an extension of the country’s second bailout program.

Here is Goldman’s full take:

From an economic perspective, Greece shows that “internal devaluation” – whereby structural reforms are meant to restore competitiveness and growth –is difficult politically and a poor substitute for outright devaluation. Emerging markets that devalue during crises quickly return to growth, powered by exports, while Greek GDP continues to languish. We emphasize this because – even if a compromise involving a debt haircut is found – this will not do much to return Greece to growth. Only a managed devaluation, with the help of the creditors, can do that. With respect to EUR/$, we think the Bund sell-off increases EUR/$ downside if tensions over Greece escalate further. This is because the ECB, including via the Bundesbank, would almost surely step up QE to prevent contagion. We estimate that the immediate aftermath of a default could see EUR/$ fall three big figures. The ensuing acceleration in QE would then take EUR/$ down another seven big figures in subsequent weeks. We thus see Greece as a catalyst for EUR/$ to go near parity, via stepped up QE that moves rate differentials against the single currency.

But if this is correct, Goldman essentially says that it is in the ECB’s, and Europe’s, best interest to have a Greek default – and with limited contagion at that – one which finally does impact the EUR lower, and resumes the “benign” glideslope of the EURUSD exchange rate toward parity, a rate which recall reached as low as 1.05 several months ago before rebounding to its current level of 1.14.  Needless to say, that is a “conspiracy theory”.

Full Story @ [Zero Hedge]