Friday, 1 June 2012

Grexit..... Gerexit..... All exit!

The Euro is melting away on the forex markets.    Deposits are melting away from the banking system of countries in distress, especially in Greece and Spain.   Asset vales on most equity markets are melting away - an average of 7% loss since the result of the Greece election of May 6th.    Consumer confidence is melting away.

What's not melting away is the financial crisis.  On the contrary it is getting worse by the hour.   It looks we are past the tipping point and Euro depositors in Greece and Spain are playing it safe transferring their deposits either to Euro cash in their mattresses or in German Bunds even though none of these pays any interest.

The scare level among investors has now reached levels were investors care more about the return of capital rather than the return on capital.

Shall we be having Grexit  = Greece exit from the Euro?
Shall we be having Gerexit = Germany exit from the Euro?
Shall we be having both Grexit and Gerexit?
Or shall we be having All exit = Euro blowing up and all countries reverting to their domestic currencies     or separate into smaller but distinct common currency groupings, say a hard Euro for the North and a soft Euro for the south?

All exit is the default do nothing option.   EU politicians have been behind the curve since Greece  exposed the true state of its books in 2010.    Now they are far far behind the market which is unlikely to allow two weeks till the next Greece election on 17th June that EU politicians are banking upon for confidence restoration.   

How long will the ECB accept to continue pumping liquidity into the banking system of Spain and Greece as their own national depositors flee their own country?   How can we Maltese continue to increase our indirect exposure to the losses from Grexit, Gerexit or all exit when the Greeks and Spanish themselves are fleeing away?

Something has to happen and pretty soon.    I had explained what's necessary in my past posts:


Time is running out!

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