Eye on the Market I June 30, 2011 J.P. Morgan The Five Stages of Greece. We are putting the finishing touches on a piece on U.S. commercial real estate, which will come out next week. Heading into the weekend, a brief note on Europe. In almost every client meeting, I am asked "what's going to happen in Greece?". The best way to answer that question is by using the Kflbler-Ross model, the Five Stages of Grief, adapted for Greece. This model defines the process as Denial, Anger, Bargaining, Depression and Acceptance. Manifestations of this process appear below, personified by representatives of European governments, central banks and regulatory bodies. Axel Weber's journey from the top to the bottom of the table is illustrative of the epiphanies people (and markets) have had to face. The Five Stages of Greece Stage DENIAL Date 12/28/2009 "We don't need the IMF: it is illegal in Europe to finance budget deficits using the kind of central bank funds which are at the IMFs disposal" Manifestation Articulated by Bundesbank President Axel Weber 01/29/2010 "Greece will not default. In the euro area, default does not exist." EU Monetary Affairs Commiss loner Joaquin A km nia ANGER 02/26/2010 "Its an attack on the euro zone by certain other interests, political or financial. We are being targeted, particularly with an ulterior motive or agenda. " 02/26/2010 "Attacks by investors and the hostility shown by some sectors of the British and U.S. press amount to collusion. None of what is happening. including editorials in some foreign media with their apocalyptic comnrntaries, is happening by chance or innocently" 03/01/2010 - We have to strengthen the primacy of politics. We have to be able to stop financial markets. We have instruments of torture in the basement. We will display them if it becomes necessary" Greece Prime Minister Papandreou Spanish Transport Minister Jose Blanco Jean Claude Juncker. Eurogroup head BARGAINING 06/21/2011 "We