– Goldman’s “Conspiracy Theory” Stunner: A Greek Default Is Precisely What The ECB Wants (ZeroHedge, June 22, 2015):
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“… the immediate aftermath of such a non-payment will be to push bond yields up across the periphery. This rise in the fiscal risk premium (Exhibit 3) will of course be limited, because the ECB will likely accelerate QE, including via the Bundesbank. That will push rate differentials, especially longer-dated ones, against EUR/$. We estimate that the initial fiscal risk premium effect could be three big figures, while the subsequent QE effect could be worth around seven big figures”
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I have to agree with the Goldman greedy gut………It makes total sense. I have been expecting to see bonds in situations like this accelerate interest rates……QE cannot go on forever, and many investors are openly seeking opportunities like Goldman describes in this short blurb.
I think he is right, the ECB would see profit.
I think if Greece defaults, the other nations that used Enron Accounting to hide their debt and inflate their so-called net worth when joining the Euro will be quickly exposed. This is something the Euro leaders don’t want shown……the Euro nations are all riddled with debt.
The fact that Germany, France, Italy and Spain are underwriting much of Greece’s debt & showing themselves as strong men of Europe ought to scare the hell out of everyone. I saw it clearly the other night when reading about these four countries….. Italy and Spain nearly went under not so long ago, and neither are in a position to be underwriting Greece’s debts. The rest of the Euro nations are invested very lightly…….but all will suffer when the first domino falls……All are held together with shoe strings.