The Five Stages of (Greece) Grief

We thought this illustration from JPM’s Michael Cembalest, was worth a look given renewed talk of a Greek Bankruptcy this morning.  Axel Weber’s journey from the top to the bottom of this table is a classic illustration of the emotional cycle traveled by irrational market participants and swings in market sentiment.

Per Cembalest, “The latest deal for Greece, based on a French proposal, is another chapter in the “Bargaining” stage: it maintains the fiction that Greece’s debts will be repaid at Par, and does little to address the crumbling  economic and social situation in Greece, rising deposit outflows out of Greek banks and the possible exhaustion of their eligible collateral to post at the ECB, and collapsing Greek imports and exports. The plan is mostly designed to continue transfers from the EU taxpayers and the IMF to French and German banks, and buy some time (perhaps a year or so).”