Leonitas, I mean, Papandreou, found his "THIS IS SPARTA" moment.
I wish it didn't take him 2 years to find it. But it is what it is, and here we are. Papandreou ready to battle Sarkozy and Merkel tomorrow.
The uncertainty regarding this referendum is obvious, and oozing from the seams. He is doing what his father never did, and give the Greeks a choice: go at it alone or be in the Euro. But when emotions run high, the most likely outcome is that they (the mob) makes the wrong choice.
Anyway you slice it, the picture is not going to be pretty for Greece. IMO, if the people vote 'no', the country is truly fucked. But I do not want to get into the geopolitical nature of them being fucked. For the purpose of this blog, I just care about the market implications.
If the Greeks vote 'no', we will see:
1. 100% of the Greek debt will be worthless.
2. Will other countries follow Greece's lead? (Before this morning, I would say no, but after Papandreou's stunt, I would not be surprised to see Portugal and Spain leave.) If so, all EU banks are fucked.
Honestly, all I really care about is for a credit event to be prevented. And for this, the EU will be working on a Plan B.
Given the uncertainty, I would not be surprised to see EU banks start to see a interbank lending cease again, and a runs start taking place. The good thing is that the EFSF and IMF have about $1Trillion dollars (with out leverage) they can use tomorrow.
The next few weeks will definitely be interesting, and busy for those charged with merging and nationalizing EU banks. (Not to mention soveirgn debt downgrades of EU countries across the board.)