Dow Jones just published a handful of very scary statements from former Greek PM Lucas Papademos, the technocrat official who was at the helm of Greece’s government until earlier this month.
Papademos indicated that the room for negotiation on Greece’s bailout is small, and thus preparations for a Greek exit from the eurozone are already being made:
Photo: Dow Jones
Worryingly, Papademos’s estimates for the cost of a Greek exit exceed those estimates we’ve seen from research teams at investment banks, and amount to nearly 2-4 times Greece’s GDP.
Negative statements from Papademos could be meant to influence EU leaders to back down from the severity of their demands when they meet for an EU summit tomorrow. These statements could also be an attempt to convince Greek anti-bailout parties that fighting with Europe simply is not worth the risk.
Regardless of Papademos’s intention, the announcement appears to be terrifying investors, building on an already strong sell-off late in the day. The euro has broken through $1.27 for the first time since last week. The Dow has also seen a sharp decline: