Tags: Bove | Greece | Default

Bove to CNBC: 'Only a Matter of Time' Before Greece Defaults

By    |   Monday, 12 Sep 2011 12:42 PM

Greece will soon default on its debts and may prompt a financial collapse, a Rochdale Securities banking analyst predicted in a research note.

Greece – and maybe other countries – will default without debt relief, stated the analyst, Richard Bove, according to CNBC.

"The situation is about to collapse," Bove wrote, predicting that a European financial crisis is highly likely.

"It is only a matter of time," he stated. "The default timetable could accelerate, however. At some point, a 2008-style run on the debt of these institutions could cause a collapse."

Dick-Bove-3-thumb-200.jpg
Dick Bove
(Rochdale file photo)
Lending the nation more money and adding to its debt burden will not solve the problem.

"The strains on the situation are too great to allow it to continue. Moreover, the lack of a clear policy to alleviate the problem, now, only exacerbates the problem," he wrote, predicting that market forces will soon withhold credit from those troubled countries as well as European banks.

Other European countries don't want to assume Greece's debt, he says, and banks don't want to dilute earnings by selling capital to replace losses that will come when countries default. Although it is obvious that Greece will default and Greek banks are probably insolvent, European and American banks have not marked Greek sovereign debt to market.

But when Greece and other countries default, banks will have to raise substantial amounts of new capital to replace their losses.

Writing in an opinion piece published in the Die Welt German newspaper, German Economy Minister Philipp Roesler said an orderly default for Greece should not be ruled out.

"To stabilize the euro, we must not take anything off the table in the short run," he wrote.

Financial markets seem to be preparing for a Greek default by fleeing to safer investments as prices for safe government bonds jumped and stock values fell.

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Greece will soon default on its debts and may prompt a financial collapse, a Rochdale Securities banking analyst predicted in a research note. Greece and maybe other countries will default without debt relief, stated the analyst, Richard Bove, according to CNBC. ...
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Monday, 12 Sep 2011 12:42 PM
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