Monday, May 14, 2012

COMING CRISIS ALERT: Greece faces Euro ejection; may be pushed to "the brink of civil war" -- May 14, 2012

UPDATE: May 22, 2012

While much of the news surrounding Europe's economic decline has vanished from the headlines, the situation remains important. Corporations have joined banks in their preparation for a Greek Euro withdrawal. The EU itself has suggested the possibility of allowing Greece to remain inside the Euro club despite defaulting, although Greek politicians abhor such a scenario and the many strings that would likely be attached to it. Right now, the entire debacle appears at a standstill, and so we are lifting the alert for the time being until new information arrives, which could be at any moment, so stay tuned.

UPDATE: May 17, 2012

Banks across the world have begun preparing for the almost inevitable return of the Drachma. A coup is now feared in Greece due to the instability arising from a "messy" Eurozone ejection. Instability is also spreading to other countries, and limited bank runs have begun taking place in Spain. Will the Euro survive? Stay tuned.

UPDATE: May 15, 2012

The situation has gone from bad to worse. Bank runs are taking place across Greece as citizens hoard Euros to hedge against a perceived inevitable return to the Drachma. Current parties are unable to form a government, and a fresh election in the near future will likely produce results even more fractured than what already exists, pushing Greece into ungovernable, and unprecedented territory. Germany continues to make demands that Greece stay the course, which has prompted a surge in Greek nationalism. We will continue to keep an eye on the situation.

Angela Merkel has warned Greece that unless it agrees to EU terms, which at present is an impossibility due to the disunity among Greek political parties regarding forming a new government, it will be ejected from the Euro. 

Already weak from economic collapse, a Greek ejection from the Euro would be the country's financial death blow and send finances spiraling. An outgoing minister has just spoken publicly that the chaos will be so overwhelming that a civil war could easily erupt at any time. Greece's next major debt repayment chunk is due Tuesday, May 15th. What will happen when it cannot pay?

The ramifications of all this are startling. Several other nations, including Portugal, Spain and Italy are also sliding towards the precipice, and a domino effect of Euro ejections may soon follow, which may inevitably lead to the collapse of the European Union itself.

It is important to keep in mind that the EU is more a financial union than a political one; most of its political ambitions have failed or attempted to bend democracy unsuccessfully. Without a central binding agent between the nations of the union, that is, a strong, stable Euro currency, the reason d'etre for the Union itself is rendered void. In addition, history has shown that a major, binding currency has never faced collapse without an armed conflict erupting between a portion of, or all of its former users. Something to keep in mind.

Will Greece's forced exit from the Euro take place, and will it cause a collapse of the Euro, or even the Union? Is this a major event or simply a financial bump in the road that's overblown? What will become of the world should this event(s) take place? Things are hazy at present. If we were to put things on a percentile scale of events heading in the direction of people's worst fears, we'd say there is at least a 60% chance of this happening based on our analysis. In truth, things are worse globally than they have ever been in the financial realm.


1. Consider an immediate sale of all Euro-based assets due to an inevitable drop. Consult with your financial planner for the best advice.

2. If you are in Greece, it would be wise to have an exit plan should social disorder erupt. If you are unable to leave Greece, stay close to a radio, TV and the Coming Crisis for more information as the situation develops. Stay clear of protests, and be on the lookout for armed gangs. Preemptive exits are always safer than panicked ones.