Chillin' out till it needs to be funded
The Greek and Portugal national default, as likely and now also triggered by the newly driven down debt ratings, have been coming for some time.
ECB, Germany ( Eur 35 billion) and France ( Eur 60 billion ) have current exposure within the Euro system and Greece is going down for Principal payments due on May 19 for which EUR 45 billion was sanctioned with IMF and Germany, Germany on the verge of approving legislation to save the Euro and thus Germany itself.
If ECB is asked to pay instead of the ‘semi’ bailout, it’s huge exposure is likely to result in Capital Calls for the Central Banks around incl Spain ( Petersen Institute on Bloomberg)
Spain, Portugal and others in Europe paying off national debt would have a tougher task ahead when default knocks on the door. Euro is now pegged at a highest target of 1.33 to the Dollar, cutting short its revival and leadership.
However, the crash of the Euro is likely to a self contained implosion unlikely to engender another global recession.
Meanwhile, The European Central Bank has already been signalled to eat its chops and nurse its version of “stimulus withdrawal” back into the wine cellar if it be.
ECB is likely going to absorb the magnificent strutting deficits of Germany, France, UK and thus Spain , Greece and others keeping open and expanding the Liquidity on Tap program for the Euro zone (Thanks FTAlphaville)
Jean Claude Trichet in the meantime has become conspicuous tin trying to manage the contradictions on show, while the euro liquidity support will increase and thus the Euro is likely to recede to pre 2003 levels
ECB=European Central Bank