Uncontrolled greek default - effect on UK banks

lvader

celtic123 wrote: »

must add tho thats worst case scenario.the market is irrational, who knows for sure. i think a world wide recession is guranteed tho

Greece will have little or no effect on a global recession, the numbers are far too small.

celtic123

lvader wrote: »

Greece will have little or no effect on a global recession, the numbers are far too small.

am not saying greece directly. i am referring to the consequence of contagion. if greece defaults, spain,italy and portugul could too. and ppl are irrational. bank runs happen in crises like that

celtic123

UBS estimates
that a collapse of the euro that left
Germany on its own could produce loss of as much as 20% to 25% of
German GDP!, in the first year after a
breakup of greece.

john_k_5

celtic123 wrote: »

in a nut shell a full default would cause european banks to encur massive losses. it may also trigger a bank run forcing banks to sell securities.

governments would not tolerate a bank run that would threaten to bring down the banking system and would have contingency plans in place for dealing with that situation. e.g. in the 2007/2008 crash germany's contingency plan was to temporarily close all the banks to provide time to stabilise the situation, though as we know that plan did not need to be implemented.

celtic123

john_k wrote: »

governments would not tolerate a bank run that would threaten to bring down the banking system and would have contingency plans in place for dealing with that situation. e.g. in the 2007/2008 crash germany's contingency plan was to temporarily close all the banks to provide time to stabilise the situation, though as we know that plan did not need to be implemented.

yeah thats true. but if banks are refusing to lend the economy suffers.and if that happens national debt goes up and bond yields rise as worried investors worry about a default. if a few major banks went down the uk may not be able to afford a bailout this time. however, i believe thats the worst scenario. you cannot deny tho it wouldnt be bad for britain.

Thrugelmir

competitionscafe wrote: »

"Who owns that Greek debt? As I've said, mainly French and German banks.

Around 50% is held by Greek banks. The amount held by French and German banks is manageable. Far far less than the amounts that the UK bailed out its own banks with.

celtic123

Thrugelmir wrote: »

Around 50% is held by Greek banks. The amount held by French and German banks is manageable. Far far less than the amounts that the UK bailed out its own banks with.

you dont seem to get it. its not about whats managable directly. its the domino effect and contagion on italy etc. german economy could constrict a quarter according to studies and you think thats managable?

either you have cognitive dissonance or you didnt study economics.