Wednesday, December 28, 2011

Will Scheduled Release of Greece Banking Sector Report on 12/30/11 Be A Market Moving Event?

For doom and gloomers, a critical aspect of identifying opportunities for making money from the coming collapse of the economy is to predict events and dates that are likely to be catalysts for major market moves. In this vein, an interesting report is scheduled to be issued on Friday (12/30/11). The Greece Analytical Accounts of the Banking Sector for November is scheduled to be announced that day.

A collapse of the Greek banking system could be the first domino that sets off a chain reaction leading to an economic collapse. A run on the Greek banks could result if it becomes obvious that they are close to default based on the erosion of their deposit base as money continues to flow to safer havens.

There are three keys as to whether this data becomes a market moving event:
  1. The report must actually be released on the scheduled date (12/30/11)
  2. The report has to show a significant decline in bank deposits
  3. The markets have to decide that the change in deposit levels is a meaningful event.
As a caveat, the November 8 report that Greek bank deposits had dropped by $6 billion in September, the largest monthly amount ever, had no discernible impact on the markets. Thus, this report may also be a non-event. However, it is worth monitoring.

12/30/11 Update

The 1% decline in Greek bank deposits in November turned out to be a non-event. However, the fact that  deposits are down 26 percent from the peak in December 2009 and at their lowest level since February 2007 is not a sign of a healthy banking system.

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