Greece reaches breaking point
September 9, 2011 2 Comments
It appears that Greece has now entered the final stages of its debt-induced crisis.
“Ladies and gentlemen, the situation is serious in Greece,” German finance minister Wolfgang Schaeuble , who has been at the heart of trying to resolve the crisis for the past two years, stated simply as he began a speech to Germany’s Bundestag on Thursday.
Greek bond yields have continued to rise as talk spreads that it will not be getting the next stage of bailout funds, having failed to meet requirements for access to the funds. Greek 2 year bond yields are now at 53%, while even the 10 year yield is pushing 20% (see chart below).
It could be that Greece has only a week or two at best before financial implosion, probably culminating in a voluntary exit from the euro. Certainly it could be days if the next tranche of funds are withheld.
Uh oh, my portfolio isn’t prepared for such a cataclysmic event; I’m going to need to take some time to do so during the weekend.
Well it’s no certainty, but it’s really not looking very promising. Presumably if Greece were to default and leave the euro (if that’s even possible – from what I gather there is in fact no mechanism for a country to leave the euro; it was intentionally designed that way) the only assets you would want to be holding would be gold (as much as it pains me to say it) or cash.
Not a very palatable investment selection option.