This is a topic that I have avoided, for the obvious reasons, but it has become serious enough to threaten to spill over into areas where we do venture to comment. So here goes. Early in the year, when few thought it possible, I stated plainly in a discussion that the Greek situation could best be solved by an IMF intervention. As it turned out, that is exactly the plan that the Euro powers hatched over the last couple of weeks.
The situation has gone from bad to worse, and I am now convinced there is a high probability that Greece will have to exit the Euro and reissue its own currency. Anecdotally, there are reports of bank runs and capital flight after yields on Greek bonds blew out this week, dramatically. This can’t end well. It also can’t help but rile the global capital markets. Marc Chandler is all over this (see link in Blogroll), so I won’t reprint it here. Time to start carrying the umbrellas, there’s a good chance of rain in the forecast.