Greek bank stocks basically just behave like broader European markets, except in an extremely high-beta exaggerated manner.
Today Europe is getting smoked. So Greek bank stocks are getting killed.
Anyway, in addition to the political problems, the country is quickly running out of cash again.
Dow Jones FX Trader cites a news report saying that PM Papademos has warned that the country will face a cash flow situation in early June. That's even before a new election, if there is going to be one.
The country desperately needs outside cash. The impetus to form a government now, and not go through all the uncertainty again is massive.
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Paul Krugman has a gloomy post this evening explaining how quickly the whole Euro could unravel.
It basically goes like this: Greece leaves the euro "very possibly next month." That would lead to a massive run on Italian and Spanish banks. There would be massive borrowing from the ECB to prevent a banking collapse. At which point Germany has to decide: Shoulder a major burden for the debts of Spain/Italy, etc., or let it all go.
He concludes: "And we’re talking about months, not years, for this to play out."
This might be extreme, but it might not be, but the key is that it would be a Greek departure that would set it all off. A country leaving the Eurozone would have terrible consequences, which everyone realizes, and actually that part of the reason that investors don't think it's going to happen -- because it would be so bad.
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