Greece needs to find €1.6 billion for payments it has to make in June, with nearly €300 million needed for June 5th alone. The Greek finance minister Mr. Varoufakis has repeatedly said that Greece does not have the funds and that a new deal with more lenient conditions has to be made. This is in stark contrast to what the ECB, the IMF and the German Chancellor has been saying, where fundamentally the loan stands as it is and no part can be forgiven. Mr Varoufakis’ answer to that has often been that a Greek default would spell disaster for the Euro and lead to its disappearance. I think he is clearly trying to play his cards the best he can. But do the markets think a Grexit would spell disaster for the Euro currency and therefore also negatively affect the economies of those countries that have benefited from the single currency?? Looking at the Bond market for Italy and Spain and comparing them to the last Greek crisis, 10 year government bond yields are currently at 1.84% and 1.79% after reaching highs of 7.25% and 7.60% in the previous crisis in 2012. Clearly the Bond market does not fear a Greek exit. Looking at the Euro, which has seen a steady decline since June last year, falling from levels of 1.3650 to current levels under 1.1000 and is due largely to QE program which started when the USA ended theirs. I would not consider the low exchange rate as indicative of a Grexit, there are many other factors that can drive a currency’s exchange rate. But the government bond yield is indicative of the health of a nation, and the rest of the Euro area seems in good shape.

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