Why the coming collapse of Greece will cause a financial doomsday

Friday, June 22, 2012
By Paul Martin

June 22, 2012

If you want to be scared, truly terrified, listen to Mark J. Grant. He might be right. For the past two years, Grant, a managing director at a regional investment bank in Florida, has been predicting the bankruptcy of Greece and a cascade of chaos across the global economy, attracting quite a following on Wall Street in the process. “Greece will be forced to return to the drachma and devalue, and the default will cause bank runs and money flowing into Germany and the United States as the only viable safe haven bets,” he declared in the days before Sunday’s Greek elections, irrespective of which party would win. “Greece will default because there is no other choice regardless of anyone’s politics.” He then walked through the falling dominoes: “It will hit the [European Central Bank], the banks on the other side of the derivatives contracts, all of the Greek banks who are really in default at present and being carried by Europe as well as the nation, and the Greek default will spread the infection in many places that we cannot imagine because so much is hidden and tucked away in the European financial system.” Welcome to Doomsday, brought to you by Grant. He says he doesn’t think of it as such; he calls it “reality.” He told me, almost hopelessly, “There’s only so much money to go around.” In a January 13, 2010, report Grant forecast that Greece would default on its government debts, one of the first to publish such a prognostication. Grant could be the Nouriel Roubini (Dr. Doom) of the European crisis. Roubini, the New York University economist, said the subprime-debt sky was falling for a long time before it fell. Few people listened, in part, because nobody had ever heard of him. Then, of course, the sky fell. Now everybody has heard of him. Time will tell, but soon everybody could know Grant. The January 2010 report, written two years before Greece did indeed default, has made him the go-to forecaster of Europe’s collapse for some of the world’s largest investors. Nicknamed the Wizard, Grant, who works for Southwest Securities, sends out a daily report, often frightening in its detail and matter-of-factness, by email to a who’s who of the world’s biggest institutions, hedge funds and sovereign wealth funds. Subscribers like Bill Gross, a founder of Pimco, the world’s largest bond fund, pay thousands of dollars a year to receive Grant’s views in their in-boxes. Never one to sugarcoat his views, his success is partly a function of his plain-spoken way of making complex ideas simple. -SMH

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