What fireworks do you guys expect this week?
Interesting question. Mermaid. I was just thinking the same thing.
Clearly this whole business is becoming steadily more and more obviously deeply serious, structural and out of control, by the week. The whole tenure of the comment, in the mainstream press has become accepting of the inevitable default of Greece and the consequences are being discussed widely in the media, with greater and lesser consequences suggested, depending on the particular discussion.
I think the reality of how totally unsustainable the Spanish and Portuguese position in this has become, has been significantly highlighted by the Bankia fiasco.
And it IS a financial fiasco which was possible, only because, the financial regulators in Spain colluded with all the Spanish Banks to deliberately understate liabilities, extensively, in an attempt to mislead the markets. Fraud once again in high office, within the EU, and with, as yet, no consequences, whatsoever for the miscreants.
I think this is the beginning of the end (I might be repeating myself here!!??) for the EU continuing to try to pretend that there is in fact any realistic prospect of these defaulters recovering.
The absence of the strutting buffoon, Sarkozy, dismissed by the French, in the realisation that his policies were suicidal for France has changed the game. Add to that the Greek, electoral result that was, in any terms, a slap in the face for the austerity parties, has been another game changing event. There is every prospect that the next Greek election will finally nail the default of Greece to the mast of progress.
Perhaps, most importantly of all the Bankia disgrace and the complete mess, that this has produced, in Spanish Banking is IMO the real nail in the coffins of the defaulters.
In reality Bankia are asking for a straightforward hand out of £39 Billion(at the last count.) doubtless it will rise and rise, without any package of detailed financial information, being available to support the application to the Spanish government.
They want a 40 Billion loan because otherwise they will go bust. This is NOT real business. In such `a situation in normal business this would have been flagged up months ago, and the due diligence assessments, essential to the process, would all have been done by now. In normal business Bankia would fold and the Spanish government might reimburse the Spaniards who have money in the Bank. Not that there are many left by the look of it.
The markets MUST be able to see through this nonsense by now. Spain is totally insolvent and cannot afford to bail out Bankia or all the other Spanish Banks that have been downgraded by Moodies to junk status, this week.
The ECB cannot afford to bail out Spain. Yet. on the face of it. Spain will bail out Bankia, the ECB will bail out Spain and peace will return to the EU. NO in a word. The game is up and the complete dishonesty of such a fraudulent process is totally apparent, to all, at this stage.
I therefore expect serious widespread contagion passing on to all the other financial institutions in Spain and then on the institutions in Portugal. I think the Greek institutions are already beyond junk status.
The EU and ECB will make all the right noises. But IMO the game is up. The complete insolvency of the defaulters is a De Facto matter now and utterly apparent, and warm promises and smooth words will not repair the damage.
The real question now must be: how long and how far will the contagion spread through Europe and the Euro. A very long way. I fear. God help the peoples of the Sovereign states involved. Someone will certainly need to.