The prevailing wisdom is that Greece will default (soon), and any talk of an orderly insolvency or a ringfencing of the financial system in Europe is being mocked by the markets right now.
European banks are getting destroyed.
Real quickly, a few notables:
This list could go on and on.
There had been rumors of a big Moody’s downgrade of some French banks, but that hasn’t happened yet… but it hasn’t needed to for people to freak out.
It Looks Like Everyone’s Giving Up On Greece
Greece isn’t ripping the cord this weekend, but it probably doesn’t matter.Everyone’s throwing in the towel.
Headlines about Germany bracing for a Greek default are pretty telling.
Says Bloomberg: “Germany May be Ready to Surrender in the Fight to Save Greece.”
The gist: After two years of step after step to prevent a default, all the smoke signals from Berlin indicate that the fight is over, and that Greece is probably going to default.
Of course, the market has known this was probably the outcome all summer, with short-term yields hitting cartoonishly high levels.
The question is: Can banks avoid an immediate hit, and will a Greek default cause a crisis of confidence in Italy, Spain, and elsewhere?
If there is a ray of optimism, it’s that Greek PM Papandreou certainly didn’t sound like he was throwing in the towel at his speech yesterday.