D-Day For Greece And Another Eurocalypse Report From Goldman Sends Europe Tumbling Once Again
by Tyler Durden
And so once again Greece, and Europe in general, reminds the markets it exists, and in doing so sends risk lower across the board. The most specific reason cited why the Euro is in multi-month freefall, and French and Italian banks are tumbling is that today is D-Day for the Greek bondholder debt swap, which expires later in the day. As a reminder, as part of the Greek Bailout #2, about 90% of holders of Greek bonds are expected to tender their bonds in order for the “bailout” to be successful. There is one problem: this is not happening, and now the backtracking begins. Adding fuel to the fire is another wolf in sheep’s clothing report from Goldman which while saying the same banks will be ok at the end of the day, implies that many others will be locked out from capital markets, and will force many of the smaller banks to liquidate: to wit – “If the governments choose to impose haircuts on banks’ sovereign debt holdings, capital will need to be raised. We see banks that trade at reasonable valuations being able to do so in the market. However, those most likely to be effected (GIIPS domiciled) would need to source capital in the public sector; their low valuations would likely make this prohibitively expensive for existing shareholders.” Read – bankruptcy… Not the word Europe needs to hear today.