Bank stocks sink on Greek vote bombshell (financial markets don't like or want Greek democracy)

[Cali_Democrat]

Banks sink on Greek vote bombshell
LONDON/FRANKFURT | Tue Nov 1, 2011 12:08pm EDT

(Reuters) - French banks and lenders exposed to Greece and other weak euro zone countries slumped on Tuesday after Greece's leader said he would put a bailout plan to a referendum, raising the risk of a disorderly default.

<snip>

If Greek voters reject the unpopular bailout plan it could result in a "hard default," which could force banks to take losses of about 75 percent on their Greek sovereign bonds, trigger payouts on credit default swap insurance contracts, and raise the threat of a systemic risk, said Andrew Lim, banking analyst at Espirito Santo in London.

"If we get a hard default in Greece, it will exacerbate the situation with Italy and Spain. It just increases the problem of Italy going down the same route, and that's the real risk," Lim said.

Greece's referendum is expected to take place in a few weeks, adding uncertainty about the bailout to a febrile mood in the European financial sector. Last week's deal had raised hopes a line could be drawn under banks' Greek losses and euro zone bonds could be sold to China and other investors.

Read more: http://www.reuters.com/article/2011/11/01/us-markets-europe-stocks-banks-idUSTRE7A01D220111101

I hope they vote to reject the austerity bailout and tell the banks to shove it.

[Vincardog]

1. I hope WE ALL vote to reject the austerity plans and tell the banks to shove it.

[RKP5637]

2. +1000 +++ n/t

[pampango]

3. If Greece defaults, the far-right rejoices. Greece will be out of the Euro, maybe the EU.

The European far-right didn't want to help Greeks to begin with. They also want the EU to go away, so they'lll be happy with a default wether the result of a referendum or any other way.

If there is no bailout of Greece and the EU is weakened, the far-right will count that as a double win. T

They want to go back to the days when national sovereignty was paramount in Europe, not the last 50 years of openness and cooperation between countries.

[barbtries]

4. all i really know about this situation

is what i hear on NPR, so please forgive me if i'm full of shit, but when i heard that Papandriou (sic?) had decided to take the issue to Greece's voters and requested a vote of confidence for himself, my first reaction was "that took courage."

tell me all the ways i'm wrong, i really would like to know more.

[MadrasT]

8. That's what I thought, too (n/t)

[FreeJoe]

5. I don't see it as market's not liking Democracy

If the Greek government had staked out a position of wanting to default on their bonds but then put that decision to a vote, markets would rise. It's not "Democracy" that is causing the losses but the results of Democracy in this particular case.

Personally, I avoid anthropomorphising the market. It doesn't really like, dislike, or fear things. It prices things. A lot of companies are worth less if Greece defaults on its debts. It also raises the perception of risk of other nations defaulting, which lowers the value of other entities.

At the end of the day, the Greeks don't really have many choices. Like an insolvent person or company, they are not going to meet the terms of their debts. They have some options in how much they pay back and under what conditions. They are going to have much less access to credit. That means that they will be facing austerity in some form or another in the near future. They'll live less on borrowed money and either spend less, tax more, or some combination of the two. The other European countries aren't really trying to dictate how the Greeks live. They are just attaching strict conditions on additional loans to Greece. If the Greek people don't want to agree to the deal, they don't have to. They do have to live with the consequences of their governments actions.

[Celefin]

6. Italy next then?

All rational thoughts aside,
if this should end up sinking Berlusconi for good, it might just be a price worth paying. ;)

Anyway, they should default.
Then they will at least have a chance of recovery within a lifetime.
They are facing misery either way.

[rdking647]

7. the greek vote wont happen

it appears that its against the constitution..

[Cali_Democrat]

9. It's on according to the BBC and Greek government spokesman

http://www.zerohedge.com/news/greek-referendum