Greece ready to default in mid-October?

Will Greece now default because it is unable to meet a mid-October deadline for $11 billion in repayments to its debtors? It looks a very real possibility unless something changes radically on the eurozone political landscape.

US Treasury Secretary Tim Geithner came home from a summit of finance ministers last week after being effectively told to mind his own business. There will be no bailout of Greece before a Day of Reckoning or additional eurozone stimulus.

Lehman moment

Policy wonks say the euro-elite has given up on Greece and thinks the eurozone needs a Lehman bankruptcy moment to make it wake up to the reality of its economic problems. Only when the euro plunges and stock markets take a blood bath will the necessary centralization of power be politically possible.

Indeed, this is not a new observation. Many noted the flaws in the euro as a single currency when it launched two decades ago and predicted that it would only finally come of age in a major financial crisis.

This is where we stand today. Last week politicians managed to get one thing right: they stopped talking about an imminent Greek default. However, there was no leap from keeping-the-mouth-shut to action.

So while financial markets rose last week they are primed for a fall this week. It cannot be long before the ususal pass-the-parcel attitude to this crisis starts again and the blame game continues.

The hope must be that when the crisis over the damage done to the eurozone and by extension the global economy is not as great as many fear it will be. But financial markets may well scare themselves stiff in the meantime.

Time is money

We don’t know how long this will take to play out. The quicker the better really as this time delay is expensive in itself and achieves nothing.

At some point in the near future it will be the best possible moment to buy certain assets, namely those that will bounce back first and highest from this disaster.

The ArabianMoney investment newsletter for next month will focus on a few of these opportunities which offer a once in a lifetime chance to become rich for subscribers (click here). Those who decide against making this modest subscription will lose out as we cannot afford to give our best ideas away on this free website.