7 Signs that Endgame Nears in Greece



The Euro is still defying gravity and staying above 1.40. But there are heavy doubts that this will last. Here are 7 fresh signs that Greece is about to default sooner than later, that it won’t be good and when this crisis can come to a climax.

  1. Europe getting tough: Politicians from rich European countries begin feeling where the wind is blowing and finally threaten not to throw more good money after bad money. Putting it simply: Greece didn’t fulfill its obligations, so it will not get the next tranche of the bailout.
  2. Moody’s is blowing up the jargon: All the creative semantics provided Jean-Claude Junker and his friends regarding soft restructuring / re-profiling / re-scheduling were very interesting. Moody’s clarifies that almost any such move would be a default.
  3. ECB Playing Down Exposure: ECB Italian member Bini Smaghi said that the exposure of the ECB to Greece isn’t too big. Of course, he opposed restructuring and think that it will be a disaster. But playing down the ECB exposure shows that the ECB, the last bastion against restructuring, is acknowledging the inevitable.
  4. Greek bank faces the truth: In a presentation to investors, the Greek Alpha Bank published its Q1 results, and this contains very worrying signs of the exposure to government debt, and the high dependency in the ECB. A rare moment of truth/
  5. Greek scramble: In a last moment effort, the Greek government provided a hasty and ambitious privatization plan in order to pay its debt. Is this serious? The opposition doesn’t think so and prefers to distant itself from the sinking ship.
  6. The market says so: Yet again, Greek CDS spreads rise to new records. The chance of a default is now 71% according to these spreads.
  7. No time left: The results of the EU / IMF checkup for Greece have been delayed over and over again, while we all know the results: Greece missed again. Juncker said it will be next week. Some kind of solution will better appear next week, before Greece goes on a general strike on June 4th. Given the unrest in Spain and recent violent protests in Greece, this is quite worrying.

Merkel already understood that she has no better options, especially as the public turned against her in regional elections in Bremen. All the warnings about the consequences could materialize: we already see warnings for Italy and Belgium, as well as rising Spanish yields. Protests in Spain continue also after the elections.

The Euro already got a blow a few weeks ago and lost its highs at almost 1.50. But it is still holding well. Will we see a collapse in the next 10 days?

For more on the Euro, see the EUR/USD forecast.




About

Yohay Elam – Founder, Writer and Editor

I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I’ve accumulated. After taking a short course about forex. Like many forex traders, I’ve earned the significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me.

Before founding Forex Crunch, I’ve worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.

3 Comments

  1. Lizzy says:

    Based on the technical indicators, high likely EUR can come down to 1.3950 tonite.

  2. Yohay says:

    Thanks Lizzy. I also see 1.3950 as important support.

  3. yakoo says:

    Lizzy it did not happen, but now a new week what you think?

Read previous post:
daily outlook wednesday
Forex Daily Outlook – May 25 2011

Durable Goods Orders in the US and GfK Consumer Confidence in Europe are the main events...

Close