Lately I have been getting a lot of email and messages from folks asking me what I think of the Greek referendum or about the Greece rescue plan. Let’s get one thing straight here. Greece is a country the size of the State of Alabama.
In my view a lot of this talk about Greece is merely a smoke screen which is blinding us to a much bigger problem in this financial crisis. This is the fact that there is a systemic liquidity risk within the banking industry as a whole. The risks involved will send shock-waves beyond the borders of Greece. Already we have felt the initial signs of this shock wave after the recent folding of MF Global.
Here is a great article by Tyler Durden of ZeroHedge on the probability of a domino effect beginning with the news that the CME just made the maintenance margin equal for everything.