Greece Going Lehman On Us

Big news this morning is Commerzbank pulling its repos that are supporting the Greek banks. These are overnight facilities, and may lead to runs on Greek banks. Unless someone steps in (IMF? IMF?) this should put the Greek banks into a liquidity meltdown. This chart from ZH shows the yield curve “pancaking” – going to flat – because the short term (3-6 month) rates have shot up, with spreads at an “all time record for a developed country.” This usually indicates a default coming.

ZH predicts:

  • failed next bond auction for Greece
  • Euro drops below $1.30
  • Greece pushed out of EU
  • Euro to $1.15

Update mid-day: ZH reports that Greek banks have now called the remaining E17B of a 2008 backstop plan. Deposits have dropped E8.4B since Dec. The Bundesbank may be also close to pulling its life-support backing. They need to fund E8.2B rolling over in Apr20, and E27B over the next seven weeks.Tomorrow the head of the ECB is expected to provide its plan for Greece Last chance before they swallow the bitter pill the IMF is offering?

Those contrarians among you may consider that if Greece accepts IMF’s tough terms, default will be avoided and these bonds will pay handsomely (since their rates will drop all the way back on a bailout).

About Duncan Davidson 228 Articles

Affiliation: NetService Ventures

Duncan is an advisor to NetService Ventures, where he focuses on digital media and the mobile Internet.

Previously he was at four start-ups: Xumii, a mobile social service based on a Social Addressbook; SkyPilot Networks, the performance leader of wireless mesh systems for last-mile access, where he was the founding CEO; Covad Communications (Amex: DVW, $9B market cap at the peak), the leading independent DSL access provider, where he was the founding Chairman; InterTrust Technologies ($9B market cap at the peak), the pioneer in digital rights management technologies, now owned by Sony and Philips, where he was SVP Business Development and the pitchman for the IPO.

Before these ventures, Duncan was a partner at Cambridge Venture Partners, an early-stage venture firm, and managing partner of Gemini McKenna, a joint venture between Regis McKenna's marketing firm and Gemini Consulting, the global management consulting arm of Cap Gemini.

He serves on the board or is an adviser to Aggregate Knowledge (content discovery), Livescribe (digital pen), AllVoices (citizen journalism), Xumii (mobile social addressbook), Verismo (Internet settop box), and Widevine (DRM for IPTV).

Visit: Duncan Davidson's Blogs

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