What is money?
What is money?
Out of context: Reply #61
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"It's not something that stops at the European waters," Mauldin says. "Just like the subprime crisis didn't stop in California...I'm worried this one has a lot of contagion and it'll affect the world."
As for the mechanism for that contagion, Mauldin lays out the following scenario in the event of a Greek default:
- Greece has to nationalize its banks.
- Greek citizens are forced to take deposits in drachmas, rather than euros.
- Greek consumers and businesses then default on all debts because of the resulting haircut, which he estimates at 50%.
- French and German banks are forced to take write-downs on their Greek exposure.
- The ECB is forced to take a write-down on its exposure to Greek debt.