If you are looking for anyone who has an interest in setting off a new Greek crisis, do not search Wall Street or the City of London. Rather, look to Brussels, Frankfurt and the other European capitals where there is a populist threat to be seen off. On the contrary, the “Grexit” moment, which would start with capital controls, accompanied by limits on bank cash withdrawals and funds transfers out of Greece, might even support a further compression in the credit spreads on other peripheral sovereign bonds, as well as peripheral bank funding costs. The mainstream political parties in Portugal, Spain, and Italy could use the pictures of street demos, bank lines and chatter of devalued savings to fend off their populist challengers. Once Greece has been seen to be punished by the German voters, they might even go along with the scale of sovereign bond buying that the European Central Bank has been hoping for.
Posted on: Sat, 13 Dec 2014 11:22:58 +0000
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