Monday 20 June 2011

Is Greenspan really Rafiki*?

Former Federal Reserve chairman, Alan Greenspan, is 'almost certain' that Greece will fail to meet its obligations. The consequences of a Greek default are twofold. Contagion would sweep through global banks, US banks included. The probability of a global double-dip recession would be greatly elevated, obviously. More subtly, he says, the US economic recovery would falter on rising apprehension of a negative long-term outlook. Recently published economic data confirms declining confidence. Is it the end of the world as we know it?

Elsewhere, Germany's Merkel and France's Sarkozy are 'discussing' the prospect of further aid to Greece. It's political posturing, nothing more. Everybody knows that Germany and France can ill afford the failure of the Euro...

Incidentally, the Greeks may choose to default anyway...The longer this EU indecision drags on the higher the risk to other countries. If European and other banks haven't already taken the necessary steps to mitigate exposure risk given that the ENTIRE market suspected, some months ago, that a Greek default was likely, then put your money under your mattress. It's the end of the world as we know it.



*Disney's Rafiki knows what he knows.. He's a wise, mystical, wandering baboon no less vocal even in his dotage.


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