Sunday the Greeks tried to elect a new government, the results turned out to be very mixed. A new government coalition could not find common ground and the talks collapsed.
So how does this affect the Greek debt situation that was supposedly resolved earlier this year? Well some of the possible coalition members want to leave the European Union, and that would in effect cancel their obligations to bond holders of the new debt structure.
In effect the new government would change the currency back to the drachma and default on the second round of financing. The whole thing has become a political football.
Since investors have already taken a 50% haircut on their original bonds, the threat of more troubles is not as daunting as it was six months ago. If Greece will not cooperate with austerity measures, and decides to go it alone they may face an economic problem that they are not prepared for.
Shareholders in Europe clearly didn’t like the signals being sent, and hammered the Greek stock market down more than 6.5% on the day and the Greek banks down over 12%.
Can a Greek withdrawal from the ECU bring down the ECB? It is highly unlikely but certainly poses some threat.
Will the banking mess spill over to the US and other major markets?
It is highly unlikely that what is going on in Greece will cause the US markets to have a problem, but that is up to the markets to tell us.
We will be in a position to react to the market no matter what happens in the Greece. We always trade the market that we have and we don’t worry about the market that we want.
Opportunity is available in all markets and this market will not be different.
That is my specialty teaching students how to take advantage of the opportunities that exist, and turn them into profitable trades.
To reach me and have me show you how to take advantage of any market condition, speak to one of my financial consultants and sign up to work one-on-one with me here:
Keep those stops tight.
Todd “Bubba” Horwitz
P.S. We run the fastest growing online options community. With weekly webinars and a very energetic forum, my team and I are always looking for great risk/reward opportunities. Click on the link below and become a member of my community today.