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Sunday, June 12, 2011

Greece Update

by Calculated Risk on 6/12/2011 10:15:00 PM

Everyone is focused on June 20th when the 17 euro zone ministers will meet in Luxembourg. There is also a meeting on Tuesday this week (June 14th), although there will not be a press conference following the meeting. Someone will probably blink before the 20th.

So next Sunday might be the new Monday once again (like during the U.S. financial crisis)!

From Landon Thomas at the NY Times: In Greece, Some See a New Lehman

Bond traders and officials at the European Central Bank have been unified in their warnings that a restructuring of Greece’s debt would set off an investor panic similar to the one that followed the bankruptcy of Lehman Brothers.

... if they are forced to take a loss, and the ratings agencies declare Greece in default, investors [might] start selling in a panic. And they [might] not sell just the bonds of countries struggling with debt — Portugal, Ireland, Spain and Italy.
According to a recent report by Fitch, as of February, 44.3 percent of prime money market funds in the United States were invested in the short-term debt of European banks.
Citing recent data from the Bank for International Settlements, the blog points out that in the event of a Greek default, direct creditors would be on the hook for 70 percent of the losses, with credit default insurance picking up the rest. Thus, if one includes credit default exposure, American exposure to Greece increases from $7.3 billion to $41.4 billion.
Here was the article from Kash at the Street Light: Betting On the PIGs

And an update today from Kash: Greece Endgame, pt. 2

Summary for Week Ending June 10th
Schedule for Week of June 12th
Updated List: Ranking Economic Data