The EuroCrisis continues and several possible outcomes have emerged according to Economist Shayne Heffernan.
1. Europe finds the money for a real bail out of Greece, Spain, Italy, Portugal, for now this seems unlikely.
2. Greece leads the mass exit of the Euro and will be followed by Spain, Italy, Portugal and possibly others, this is now a real possibility and would allow for these countries to devalue their own currency and manage an exit from recession.
3. The Euro gets devalued, either by the Banks or by the ECB, a real value on the Euro post Greek default is around 80c according to estimates from LTN www.livetradingnews.com Asia's leading economic research house.
Regardless of which outcome results from the muddled mess the Euro Politicians created the only real interest the rest of the world has is the deleveraging of Euro Banks.
Based on estimations from Shayne Heffernan the maximum result of Europeans selling off their assets is an 8% fall in the US markets that would be short lived.
The immediate risk for Europe's banks, and for the euro region, is the developing deposit flight from indebted nations such as Portugal, Ireland, Spain and Italy on speculation those countries also might quit the currency. Lenders in Germany, France and the U.K. had $1.19 trillion of claims on those four nations at the end of 2011, Bank for International Settlements data show.
Should Greece leave the Euro, its new currency probably would suffer an immediate devaluation of as much as 75 percent against the euro, forcing individuals and companies to default on foreign loans.
European Union leaders have been advised by senior officials to prepare contingency plans in case Greece decides to quit the single currency. Now the politicians that were in charge and are responsible for the EuroCrisis have urged the country to stay the course on austerity and complete the reforms demanded under its bailout program that will lead the nation to collapse.
After nearly six hours of talks held during an informal dinner, leaders said they were committed to Greece remaining in the euro zone, but it had to stick to its side of the bargain too, a commitment that will mean a heavy cost for Greeks and will be rejected.
For now the most likely result is the disintegration of the European Union or a Euro collapse to 80c.
Shayne Heffernan oversees the management of funds for institutions and high net worth individuals.
Shayne Heffernan holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reached a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services.Read the Terms of Service