Thursday, May 24, 2012

Greece Exits the Euro

http://www.bbc.co.uk/news/business-18074674

Very nice summary of the impact. Just click on the different icons.

Now think for a moment.. Put yourself in the same situation.

If you are a Greek with money in the bank, when you hear talks about Greece exiting Euro, what would you do?

This is a death spiral..  Talks like this will just forced more people with the means to draw money from the bank and moved it somewhere else. The 1st stage of panic is already set... Mayhem cometh... sooner or later..

If you are one of the banks in Euro supporting the Greeks and other european nations' debt.. what do you think.. your shareholders and others might start dumping the shares in anticipation of the mayhem.. this is the 2nd stage..

If you are one of the other countries with similar debt problem as greece, what will your stakeholders think when they see 1st and 2nd stage happening... They will stop lending too..

Onlookers from around the world.. comes next.. they will start examining any linkages to the Europeans (good or bad) and may do the same.. Dump first..question later. Remember Lehman & Bear Sterns? Local banks were reported to have some linkage to them in 2008 and almost immediately, you can feel the fear in the market even though alot of companies are not directly related to the loans.

6 comments:

Elder Shield Singapore said...

I think it's better for them to leave the euro standard for many reasons. Personally, I think the euros in many ways are like the usd, printing more money.

Drizzt said...

are you still holding your VXX wealth journey?

Wealth Journey said...

I've been trading VXX during the correction and was quite ok. Final result was around 10% profit after cost. Though it was a hedge against doom, but not too bad.

Anyway, I am intending to enter VXX again. As long as the first sign of fear.. just entered first! :)

Drizzt said...

oh haha. i thought you held on to it kind. good choice. sigh, im getting killed by it.

Wealth Journey said...

As always, if you are trading it as a hedge, then you got to set your stop loss limit. The reason i got only around 10% was because my last trade was exited with a loss.

Drizzt said...

thank you!