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If Greece is actually going to leave, the Euro will be stronger

Eastern Europe will hurt more

Baku. 6 July. REPORT.AZ/ What comes next politically is difficult to predict but markets are slightly easier. If Greece is actually going to leave the Euro will be stronger. For now I expect 2-5% range the first 24/48 hours. Report informs, Saxo Bank’s Chief Economist Steen Jakobsen said commenting on affect of Greek situation on financial markets.

He said that, DAX will open down 5% - again - and probably lose 10% during next few weeks unless ECB and Fed does a repeat of 2010-11 plunged protection teams. As well, Bulgaria, Croatia, Romania should see considerable spread increases. 

"The mere idea they will have new deal in 24 hours is pure fantasy as it has been every week when the Finance Minister promised us a plan by next week", he says. 

"Market will see 5% drop in equities, 20-50 in fixed income spread expansion, Eastern Europe will hurt more, uncertainty has increased (which market never likes), Greece banks will most likely remain closed. Pretend and extend died tonight, hopefully its replaced with a normal business cycle, normal ebbs and flows, but first politicians will try to save face but trying to do just one more rounds of pretend-and-extend, but patient has died", Steen Jakobsen added.

Europe on the other hand also lost - my classic argument since day one: The Greek tragedy is one without solutions. No winners, only losers. Europe looks inflexible and stubborn. Clearly we finance people understand and mostly agree with the medicine prescript, but at all times any policy needs to embedded in democracy and in the ability of carrying through on the plan. Europe as often before not failed but played for broke.

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