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I have to agree with Jake here.  Much as I believe this whole situation has been spectacularly mismanaged by the Troika and Eurogroup, I don't believe the markets will be all that surprised.  There will be increased volatility as the situation unfolds, certainly, and, as my own diary makes clear, I don't see there being a quick solution for the Eurozone.  However the surprising thing may well be how little a Greek default effects everything else.  Greece is only  a tiny % of the Eurozone economy and it was tanking anyway. The rest of the Eurozone is growing and in a cyclical upturn. Euro devaluation and QE will keep things ticking over.  So unless you are talking about factors and issues specific to Portugal of which I am unaware, I wouldn't be pressing the panic button just yet.  If anything the Eurogroup will be desperate to ensure it doesn't repeat the mistakes it made with Greece - and that could even increase Portugal's bargaining power - if it has a Government smart enough to realize that.

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by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Sun Jun 28th, 2015 at 06:12:57 PM EST
[ Parent ]
I am not pressing the panic button, and I don't think the Greek people are, though the politicians (of all stripes may be), but I do worry for Portugal. Portugal needs to be protected because of its banking structure and the fact that its bank have lent so much to the periphery, and likewise, the periphery (esp. Spain) has lent so much to Portugal. Greece is an outlier because it did not have much private debt, and it was mainly an issue of public debt, and that debt came through France and Germany, which meant the big boys could wield enough violence to make the euro taxpayers fall in line, capitalize the German and French banks, almost without awareness of what was going on. With Portugal, they simply cannot sacrifice it, because the media in the big countries would quickly point out the relationship with Spanish banks. Portugal must be protected t all costs. If Greece was the scapegoat, then Portugal is the lynchpin. There is no eurozone without Portugal.
by Upstate NY on Sun Jun 28th, 2015 at 07:39:26 PM EST
[ Parent ]
That seems like an optimistic take.

It would require the key players to have learned a lesson from the Greek case, other than "Varoufakis and Tsipras are unreasonable, jumped up peasants who can't even dress themselves."

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Jun 28th, 2015 at 11:32:23 PM EST
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