According to analysts at Exclusive Analysis, a research firm which focuses on global risks, there is a 65% chance of a banking crisis between November 23-26 following a Greek government default and a run on the Italian banking system.
The Exclusive Analysis team warned it is becoming less and less likely that EU leaders will simply “muddle through” and have made some bold calls with clear time lines on when the euro zone will be thrown into a major financial crisis.The most likely outcome according to their analysis is a sudden crisis in which the US, UK and BRICs nations (emerging economies) refuse to provide funding via the IMF for the euro zone. In a world where predictions are made with no time lines, the paper makes some bold predictions which can be held to account over the next three weeks.
In their scenario of how it will all go down, the Exclusive Analysis team is predicting in the worse case scenario, Greece and Portugal will both collapse due to a lack of consensus on handling the crisis, and full-blown social unrest. The group predicts Germany will oppose handing over more money to the European Financial Stability Facility (EFSF).
“In face of that, China and the other BRICs (emerging economies such as Brazil) give clear signals that they will not support the bailout fund . The EFSF turns to the ECB , which refuses to print out the amount of money the former needs to bailout the PIIGS. In face of the EU’s failure to boost the EFSF, the European banks refuse to accept the 50 percent haircut on the Greek debt. Both the IMF and the ECB suspend payments to Greece,” said the report released on Tuesday evening.
This doomsday scenario comes to a head between November 23-26 when Greece leaves the euro to print money and rescue its banking sector. The new currency falls quickly and depositors lose out as their investments are converted into the new local currency.
The Exclusive Analysis team also forecasts a 25% chance the European Union will somehow continue to “muddle through”.
Exclusive Analysis is a specialist intelligence company that forecasts commercially relevant political and violent risks worldwide.