In contrast to Italy and Spain (and arguably the remaining lesser deceased EMU members) Greece is insolvent and in need of debt restructuring, so now it is from a typical investors eye like this.
Greece is on life-support and we are getting ready to find out what he has in the 'family will' and who gets what debts that he goes to grave without paying.
The main problem is who Greece borrowed money off, which has left a lot of our own banks now having to realise they won't really see their money again, making the lunch group investors not know why they shouldn't move more to the BRIC countries(Brazil, Russia, India & China).
The fire-power of the European Central Bank is also under attack, the uncompromising dedication for the ECB to support illiquidity issues of governments is crucial in some ways, though it is getting more in-tuned with political decisions and this by any economist outlook gets us extremely scared.
This is due to the ECB being the grim reaper; who lives and who dies is up to them and unfortunately that is the way it goes in positive economics, though it is being slowed down now. If the ECB had its way it would have back in late July refused help to Greece and provided them with a little get out of town cash and help with defaulting, because the longer it is left the harder the fence becomes to stop greece's plague attacking Italy and Spain.
What we discussed this morning in my Behavioural lecture was also the civil situation, a lot of us showed how Greece would likely come to civil unrest, from negative growth and high unemployment with zero money, what would you do if you were Greek?
This link gives an interactive outlook on the € members on their unemployment and GDP readings as well as their competitiveness.
I think the biggest scare is that people will have to see it like this in the eyes of most analysts as the most likely options.
1.Germany leads a € break up- possible? but unlikely right now
2.Disorderly € breakup of the bottom pile?survival of € will occur though will cause large political disruption.
3.ECB takes a hit and one country exists without contagion- meh we doubt it yet we need to still think it
4.IMF decides that Default and debt restructure will occur- As likely as a bomb falling to the ground
5.Growth and inflation stabilisation occur and everything is mulled wine & butterflies-That is as likely as my monetary integration teacher deciding she is wearing latex to the lecture this afternoon. Desirable, yet highly improbable.
