Hey IDC Holders
Here is a bit of insight as to what is happening in Greece and why, IMHO, I believe that they will not leave the EU no matter who wins the election, thereby lifting the gold price well above $1650/Oz in the next 4-6 weeks and the stock market will recover very quickly once the election is over in 3 weeks time.
What we need with IndoChine are the labs to begin to complete their analysis starting from this week, in order for our market cap to gain momentum before the Greek elections which will see an increase in money inflows in the stock market. Especially with imminent Chinese economic stimulus measures being announced this week.
As we move closer to the Greek elections, we need to continue to use economic game theory to see what the most probable outcome will be from this current situation and profit from it.
Charles Dallara the head of the IIF (International Institute of Finance) which represents the global finance industry has again reiterated that a Greek exit from the EU would have catastrophic consequences to the global financial system.
The IIF estimates a Greek exit costing more than $1,250Billion or $1.25Trillion, on the low side. His comments hold a lot of weight in the global financial markets, since they reflect the belief and sentiment of the biggest financial institutions in the world.
This potential catastrophic event to the world economy is the reason why every leader from the world's leading countries in the EU, The USA, China, Japan etc have all come out to state publicly that should Greece remain in the EU. This is the only way to go forward.
The ECB would in effect become insolvent, collapsing the global financial system, throwing the world into another depression.
Mr Dallara also mentions an olive branch being extended to Greece, an injection of approximately 10 Billion Euros to help the struggling nation in its fifth year of recession.
As we head to the Greek elections in three weeks time, we will continue to hear news about Greece leaving the EU, but when you have the world's largest financial institution, every govt in the EU, US and ASIA, as well as all three Greek parties wanting Greece to remain in the EU, it is only time before the market sentiment turns positive again on expectations of a positive outcome and lift from these current lows.
Cheers Nectar
Dallara Says Greek Euro Exit May Exceed 1 Trillion Euros
By Andrew Davis and Rebecca Christie - May 26, 2012 6:03 PM ET
Facebook Share
Google +1
COMMENTS
QUEUE
Cost of Greek Euro Exit Likely to Top EU1 Trillion
The cost of Greece exiting the euro would be unmanageable and probably exceed the 1 trillion euros ($1.25 trillion) previously estimated by the Institute of International Finance, the group’s managing director said.
The Washington-based IIF’s projection from earlier this year is “a bit dated now” and “probably on the low side,” Charles Dallara said in an interview in Rome yesterday. “Those who think that Europe, and more broadly the global economy, are really prepared for a Greek exit should think again.”
Enlarge imageDallara Says Estimated EU1 Trillion Greek Euro Exit on Low Side
For Greece, in its fifth year of recession, it may be more effective to offer extra money to help its battered economy recover. Photographer: Kostas Tsironis/Bloomberg
Enlarge imageIIF Managing Director Charles Dallara
Charles Dallara, managing director of the Institute of International Finance (IIF). Photographer: Hannelore Foerster/Bloomberg
The European Central Bank’s exposure to Greek liabilities is more than twice as big as the ECB’s capital, said Dallara, who represented banks in their negotiations with the Greek government on its debt restructuring. As a result, he predicted the bank would be unable to provide liquidity and stabilize the euro-area financial sector.
“The ECB will be insolvent” if Greece were to exit the euro, Dallara said. “Europe would have to first and foremost recapitalize its central bank.”
Concern about Europe’s crisis has erased about $4 trillion from global equity values, as policy makers continue to argue over how to stabilize the 17-nation euro area and limit regional contagion. European Union President Herman Van Rompuy said yesterday that contingency planning for Greece leaving the euro “isn’t a priority,” while Morgan Stanley economist Elga Bartsch has said Greece has a 1-in-3 chance of a euro exit.
Previous Estimate
In February, the IIF estimated that Greece’s liabilities, in the event of a euro exit, could be crippling. “It is hard to see how they would not exceed 1 trillion euros,” the group said in an internal Feb. 18 report that hasn’t been made public.
Spain, Italy and the already-bailed out Ireland and Portugal “remain quite vulnerable to changes in market sentiment” as Europe’s sovereign debt crisis continues, Dallara said. He urged policy makers to remember the shockwave caused by the failure of Lehman Brothers Holding Inc., and that what appears to be a “containable event” may in fact bring on financial meltdown.
For Greece, in its fifth year of recession, it may be more effective to offer extra money to help its battered economy recover, Dallara said. Because Greece’s economy has shrunk so much faster than expected, it may need more time to meet its budget targets and repay its international loans, he said.
Aiding Economy
Greece’s shrinking economy could be aided “at a cost” of an additional 10 billion euros. “We’re talking about very modest sums compared to what’s already on the table,” he said.
“A small olive branch here carefully defined, nuanced in its presentation, not as an alternative to fundamental reform but a recognition that some elements of this program were not that well designed, would be a wise thing and I would do it sooner rather than later,” Dallara said.
It’s not clear whether Spain will need a bailout as it seeks to help its banks weather the euro crisis, he said. A planned audit of bank loan books is likely to show that the Spanish banking sector’s woes are “manageable” overall, Dallara predicted.
Spain is grappling with how to handle Bankia SA, which was nationalized earlier this month, and other problems in the savings-bank sector. Dallara said the systemic risk posed by Bankia “has been somewhat exaggerated” and that independent inquiries will provide an outside assessment of Spain’s financial condition.
‘Substantial Headway’
“If it is of manageable proportions, then I think it is the decision of the Spanish government to decide” whether to pursue outside aid, Dallara said.
“The magnitude remains to be determined and I think we should exercise a bit of patience and allow this process to run its course and realize that as it is, Spain is making substantial headway in budget reduction,” Dallara said.
In the long run, the euro area will need to address the “fundamental structural flaw” of sharing a currency while allowing national governments to control fiscal policy, he said. He urgedGermany to drop its opposition to shared debt and instead seek a system where joint euro bonds could be an “incentive” to fiscal restraint and structural reform.
“The only way to help markets see past that obscurity is to remove the cloud of uncertainties of national fiscal position and move toward unification,” Dallara said.
To contact the reporters on this story: Andrew Davis in Rome at [email protected];Rebecca Christie in Brussels at [email protected]
http://www.bloomberg.com/news/2012-05-25/dallara-says-greek-euro-exit-may-exceeed-1-trillion-euros.html
Add to My Watchlist
What is My Watchlist?