Markets had been increasingly factoring in a “successful” new Greek bailout package, but only after it was accomplished could definitive conclusions be drawn. The threat of another 1929-32 and 2008-09 financial meltdown and an out-of-control crash has been removed. This is significant because the consequences of such an event were way out of proportion to the probabilities, which themselves varied enormously among investors. Because these were constantly shifting depending on the news of the day, uncertainty and volatility were greatly elevated. It is possible that we have now moved, in some way, into a financial environment more akin to the post 1932 and post March 2009 period when it was made clear that the banking system would be underwritten by governments.
The Greek Bailout: A Watershed Event
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