Good morning!

This article from Paul McManus of Walbrook PR is worth a read. I met Paul recently, and we talked at length about ways to improve communications from listed companies to the private investor community, for the benefit of all - after all, it's PIs who create the liquidity, narrow the spread, and set the share price. So it's perplexing why some city firms just ignore PIs, when they should be building channels of communication & engagement.

Thoughts on Greece

The increasing likelihood of a Greek default, and possible ejection from the Euro, is the topic on everyone's mind at the moment. I've got mixed feelings about this. Clearly Greece is insolvent, so needs to default, and move on. Prolonging the agony in this way, is not doing anyone any good in the long run - it's just deferring the inevitable.

This issue has been rumbling along for years now, so arguably the market has already priced it in. The market might even rally once this issue is resolved, after the initial panic has subsided - since a major uncertainty would have been removed.

Also, the politicians and civil servants now know what to do in a financial crisis, which they didn't in 2008. They have to recapitalise and/or nationalise major failing banks. No ifs or buts, it has to be done, and fast. They know that this time, so I think Govt action will be more decisive this time compared with 2008, if we do go into another financial crisis.

On the other hand, the market has been sanguine up until now, because last minute deals have always been found re Greece. This time it looks as if there's a decidedly increased risk of Greece defaulting, being ejected from the Euro, its banks collapsing, and Greece reverting to the Drachma, which will then instantly depreciate greatly. Although in reality, I think Greece will become a cash-based, black economy, with the population continuing to use Euros for day to day transactions. That makes it even harder for the Govt to collect in tax revenues. So I don't think going back to the Drachma will be a cure-all by any means.

I can't think of any historic example where a country has abandoned a strong currency, and created a new, weaker currency. Normally it's the other way around - after hyper-inflation, countries scrap their old, failed currency (e.g. Weimar Germany, Zimbabwe) and issue a…

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