What if….Greece goes down for real?

Posted: June 15, 2015 in Uncategorized

This is an hypothetical scenario.

It still has just a 20%  of happening – but it could happen.

Why only 20% if all the media outlet cry “Greece out”?

A few points to help clarifying what happens:

– As all the participant in the 5 year saga use the Game Theory Model it is mandated that everyone is happy one week and cry desperation the other week until the last second, so to extract the max concessions (said dates are 18 June and 30 June – soft close and hard close).

– The media are actually used to soften the blow (less panic) in case Greece really goes (Graccident)

– If it was not like that there is no reason why the European Central Bank increased last week the emergency funding to the Greeks banks, while the Germans leaked (highly illegal) the possibility of capital controls in Greece (so practically they scared to death Greeks prompting them to go the banks withdrawing what they can, but at the same time insured that the banks had enough money to pay – so not to create an accident)

– The strategic position of Greece makes the deal necessary (this month Greek PM Tsiparas met at least 2 times Russian counterparts and surely is talking to China – a failed state could be even worst due to Islamic State).

But what if it really goes?

The two prevalent hypothesis seem to be

A) Benign scenario

Greece defaults, capital control are introduced, but as polls says that most of Greeks want to stay in Europe – Tsiriza will lose the majority and in fresh election a more pro-European Government will be elected and a a third bailout will be agreed. And things will remain the same

B) Bad Scenario

Greece defaults and the hard core Syriza takes the lead. Capital Control and a New Drachma are issued. Greece exit EU and soon after NATO and enter the Russian (or Sino Russian)sphere of influence. There will be a 6 month of “Armageddon” style in Greece. Then potentially Greece could start to recover (If this happens it could mean the dissolution of Europe…since countries like Portugal and Spain are closely watching.

For the markets in the short term there would be a panic moment with losses of 10% (but one would be smarter to look at bond to watch if something goes really pear shared)- this would be a great Buy – Opportunity.

All the Central Bank have drafted all kind of models and scenarios, but be wary….Napoleon famously said…even the best battle plan always last until the first shot is fired.

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