Bond spreads in so-called 'Club Med' countries (Greece, Italy, Spain, Portugal) will grow by 20 to 50 base points in the next few weeks and a significant spread increase will occur in Bulgaria, Croatia and Romania as well. Shares will drop by about five percent and if Greece were to truly leave the euro area, the euro could appreciate by the end of the week, Jakobsen said.
He warns of the significant risk of illiquidity on the market with regard to government intervention within the European Central Bank's initiative to buy off government bonds.
The Greeks do not have much to lose and austerity measures were not a good choice for a society that is on the verge of disintegration so it's no wonder the 'no' option won at the Greek referendum on Sunday. The situation in southern Europe in now officially a 'Greek tragedy', Jakobsen assessed.