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Bahl and Gaynor Portfolio Manager Matt McCormick on the challenges to European banks, particularly in Greece and Spain.
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Don't do that alright -- -- home runs are the biggest fear the European Commission as it began pressing Greece.
To wind down some of its banks but my next guest says -- European Bank run is already.
Under way.
Matt McCormick is the portfolio manager and banking analyst at ball and -- -- great to see you were again so how exactly is this is his bank run taking place.
Well when you look David at traditional bank -- you see pictures.
People lining up in front of the tellers and out the door trying to get their funds but today with a point and click given -- -- You can move your funds electronically.
And I believe that was part of the reason why you saw the ten year yields go all the way down to 145 just a few days ago.
Because people from Greece and other European countries.
We're taking their assets and moving -- into Greek bonds.
And our US treasuries and they won't a lot of up.
-- -- -- I think that's that's a great point it not only about European banks but also about who's been buying these US trade obviously US treasuries have been popping like crazy over the past couple of weeks and you say it's because because we ask a lot of traders whether US traders whether -- may say no.
It's all the Europeans unwinding.
Their euros buying into the treasuries that's watchers say.
Right because if you look let's just say what happens and I believe eventually -- will be if Greece will be forced to -- the Euro.
If you're a person in in -- right now you're in Athens and you're riding or doing whatever they're Greece -- -- should do.
You say OK -- wake up tomorrow and I see the -- come back that -- I've suffered anywhere between a twenty to 60% haircut well in my savings overnight.
It what do you do.
And and I think what traditionally when you look at.
Countries that are going through default what they do is they lower their currency they increase exports in trying -- tours and in Greece right now cannot do any of those.
It's very difficult to attract people when they're riding on the streets and they can't do because of the European structured to Europe structure so what do they do I think their stock.
That's why this upcoming election is so important to I think Greece and I think unfortunately for.
For many of the people there they have no real clear answers in my -- -- -- -- recommendations or avoid.
There is one recommendation and this goes beyond Greece is goes -- to Spain because that Spain has been pushing for -- Spain is also worried about Iran.
On its banks for the very same reason why should I hold euros.
In a bank that may change as jurors the local currency and -- lose twenty to 30% of my savings.
That Spain is pushing for a deposit -- sort of like our insurance deposit front will they get that.
I think a lot depends on Angela Merkel and the Germans -- you know I think right now everyone wants Germany to write a blank check to pay for.
They're -- it's very difficult for them to do that I would argue that Spain is essentially engaging financial terrorism to try to force them or force others to pay for their problems and I think it's going to be very difficult for especially those that have already kept their -- someone who normally namely the Germans to write another blank check chancellor Merkel has paid.
A political price in in their previous elections and I think they're gonna be very reluctant to do so.
From the bath inside you asked what do why do finally European I would lose my assets I would not keep the European next you have to -- -- investor I avoid financial.
Right right no I can't imagine anybody in the right my wanted to keep their money in euros right now knowing that some of these local local governments might take over the Euro deposits.
And turn amended the valued currency we got to leave it at that Matt McCormick very interesting information Matt thank you very much from ball and -- appreciated let.
