Wednesday, September 28, 2011

For those who thought I was too pessimistic

 From the Head of Unicredit (BIT:UCG) Security business
"the euro is “practically dead” and Europe faces a financial earthquake from a Greek default"... “The euro is beyond rescue”... “The only remaining question is how many days the hopeless rearguard action of European governments and the European Central Bank can keep up Greece’s spirits.”...."A Greek default will trigger an immediate “magnitude 10” earthquake across Europe."..."Holders of Greek government bonds will have to write off their entire investment, the southern European nation will stop paying salaries and pensions and automated teller machines in the country will empty “within minutes.”

That's no kook talking, Monday's  Alessio Rastani is now joined by a serious hitter.  Already the futures market in America (that were up 100 bps at 4 this morning) are now up only 55 bps.  Cannot wait for the Spanish finance minister to say that Attila Szalay-Berzeviczy is full of shit, and that everything is OK, this guy used to be the head of the Hungarian Stock Exchange and now runs a huge division in Europe's largest bank (also the one closest to the precipice -- it is massively under capitalized).


And from Bloomberg there is more:


The impact of a Greek default may “rapidly” spread across the continent, possibly prompting a run on the “weaker” banks of “weaker” countries, he said.
 
“The panic escalating this way may sweep across Europe in a self-fulfilling fashion, leading to the breakup of the euro area,” Szalay-Berzeviczy added.
 
Szalay-Berzeviczy has just arrived in Hungary from a trip abroad and can’t be reached until later today, a UniCredit official, who asked not to be identified because she isn’t authorized to speak to the press, said when Bloomberg called Szalay-Berzeviczy’s Budapest office to seek further comment.

Try that for size folks, Rastani said it best, use defensive portfolio management, bonds, utilities and high dividend non-cyclical stocks provide the best portfolio protection (See David Rosenberg's many comments on the issue).  Reduce leverage keep some cash at hand (when the system freezes it can lead to banking panicks where the switch is pulled).

 

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