Today’s edition of The Gartman Letter is all about Greece, Europe and the problems that lie ahead.
Lots of questions lie ahead for investors. Will Greece default? Will that default pave the way for other countries to default? Will the ECB take changes to monetary policy sooner rather than later? No one has the answers to these questions but looking at the chart below, you can see that Italy and Spain are set to cause a much bigger ruckus in the financial world than Greece has.
To that end, Gartman suggests that Portugal will be next to walk the proverbial plank based upon Moody’s cautions from yesterday. What matters the most, however, is how the ECB will handle Greek collateral over the coming months. Says Gartman:
Too, we suspect that the Bank will… or should…announce that it will extend the periods of lending upon Greek collateral, and may chose to open up repo operations that go out for a full year. That would be wise, for that would eliminate a good deal of the uncertainty over Greek borrowing and European bank
portfolios. Too, we suspect that Mr. Trichet will announce that the situation in Greece is at the very centre of the Bank’s policy making at the moment, and that this does indeed trump all other concerns. Well it should and well it shall.