From the Wall Street Journal overnight, from Goldman Sachs strategists:
- The risk of Greece exiting the eurozone is rising sharply
- And with it the risk of unintended consequences
- Even if Greece can strike a deal with its creditors, "the damage to growth will be done"
The note goes on:
- Greek households continued to pull deposits out of domestic bank accounts ... pulled €8.8 billion from banks in January and €5.4 billion in February. Corporates pulled $3.3 billion and $1.9 billion out over the same periods. Data for March is not available yet.
- "Deposit flight exceeds previous episodes and the resulting tightening in financial conditions is a severe shock for an economy"
- The market is ignoring these developments on the grounds that there has been no contagion to the rest of the periphery.
- "This is certainly the glass half full take. But we think these developments are more important than the market is giving them credit for"
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Goldman expects the EUR to keep falling:
- Goldman Sachs says EUR/USD to fall on continued portfolio rebalancing flows
- EUR/USD Squeeze Has Run Its Course; What's Next? - Goldman Sachs Elliot Wave
