Financial markets prepare for a Greek default

Harsh time for Greek financial markets after Greek banks’ valuation plunged as the new government of Prime Minister Alexis Tsipras has barely started to challenge the bailout. “There is no room for mistakes,” he said, that’s why Greece won’t seek a “catastrophic solution” in its debt negotiations. Tsipras’ words made a dreadful impression: Athens stock market took a one-day 9.24% hit. Indeed, after 24 hours of quite unexpected respite, investors finally turned on Tsipras’s aim to end austerity measures and renegotiate the country’s debt. The appointment of Yanis Varoufakis as Finance Minister added to tensions, as Mr. Market somehow sent a loud and clear warning saying that though democratically elected, Tsipras will not be allowed to do whatever he wants about what his country owes. Difficulties started weeks ago since according to Citi Bank economists quoted by CNBC, “estimates (suggest) that around 3 billion euros flew out of Greek banks in December, followed by a further 8 billion euros in January.”