Trillion-Dollar Asset Managers Warn On Greece Fallout: "No Blueprint" Means "All Kinds Of Uncertaint

[magical thyme]

http://www.zerohedge.com/news/2015-07-05/trillion-dollar-asset-managers-warn-greece-fallout-no-blueprint-means-all-kinds-unce

Despite the fact that yields on the country’s bonds spiked last Monday following Greece’s “Lehman weekend”, clearly indicating that investors were nervous about a potential knock-on effect, central bankers in the region rushed to their respective soapboxes to ensure the world (and local depositors) that the imposition of capital controls in Greece had no effect in the Balkans. Nevertheless, the contagion risk (at least in terms of bank runs by depositors who either rationally or irrationally fear for their cash) is very real, as noted by Morgan Stanley some two months ago. This was reinforced on Friday when Bloomberg reported that the ECB was moving to provide a backstop for Bulgaria in the event of a panic.

Indeed we got still more evidence that Greece does in fact matter this morning when Handelsblatt reported that according to Bundesbank chief Jens Weidmann, a Grexit would reduce the German central bank’s remittances to the finance ministry to zero, at least in the short-term.

“The market right now hasn’t priced in a potential ‘no’ vote,” said David Joy, the Boston-based chief market strategist at Ameriprise Financial Inc., which oversees $815 billion. “If we get one, we’re going to see another round of downside volatility in excess of what we saw on Monday. The move would be more violent.”

[craigmatic]

1. This is all part of the long march of history.

The whole reason they started this union in the first place was to prevent future European wars and come up with a counterbalance to US economic power. If you study long term European history you can see that this is nothing new and it'll eventually fall apart and a new war will come. Europe can't be organized long term.