Friday 15 June 2012
Squeaky Bum Time - Grexit on the cards
(As a quick aside, its a balance sheet recession, the issue in an acute crisis such as this is demand not credit. For once I'd be in favour of some big Govt capital spending increase, without actual economic activity we could have a 2008 recession rerun. Credit supply is only a part of the problem so this seems to me to be half an answer - this is not long-term keynesianism I am advocating, its a crisis response).
I see events unfolding thus:
Sunday - Inconclusive Greek general election, a total rerun of last time (the polls are almost identical). So no new Government on Monday and Syriza getting a chance next week to try and form a Government. Loans and market confidence in Greece evaporates.
Monday - Some chaos on the markets, Spain and Italy find funding hard - but no October 2008 crash, yet. G20 meeting will avoid this as traders and investors wait and see
Tuesday/Wednesday - Now what? Does the Troika give more money to Greece and will it matter? With bad policy management this could see some very sharp drops if policy response is not forthcoming from the G20.
All in all, shaping up to be a very interesting week - clogging will be heavy here in contrast to the lightness of the past week due to heavy workloads being endured by your contributors.
PS And can England even beat Sweden tonight...