The looming Greece debt crisis is coming to a head this weekend and has many differing opinions being voiced on all sides. As I wrote about last week, there is no one with a crystal ball that can tell you what exactly the future holds.

Although that is the case, the heads of financial institutions do spend a lot of their waking hours studying these types of situations and may be able to shed some light on the outcomes.

I was recently sent a copy of an internal e-mail put out by the head of a large financial institution. He outlined the likely scenarios that he sees resulting from the deadline this weekend.

Here are the relevant parts:

I’m sure you have seen that the President of the EC has stated that a contingency plan is on the table for the Grexit. He has also indicated that most creditor governments are not confident that a deal will be reached, of course this may just be posturing to scare Greece into negotiation. The Greek government now has a deadline to reach a final deal with creditor countries by Sunday night. I see the chances for them reaching a solution to be small, since neither side can make concessions without upsetting their constituencies. 

The Greek banks are now going through “slow starvation” and by the end of the next week they may be forced to issue ed pills IOUs in order to keep the economy propped up. This will likely create a black market for IOUs which would function as a parallel currency in Greece.

Later in July, the parties will need to devise a transition to a new currency, more than likely pegged to the Euro. Greece will stay in the European Union, set up technical assistance and later on humanitarian aid.

After that they will need to negotiate writing off the Greek debt and eventually recapitalizing the ECB.

What this means for the market:

• Uncertainty and volatility over the new two weeks.

Scenarios from most to least likely:

1. The global markets will recover as it realized that Greece is too small to greatly impact the Euro-zone financially.
2. If Greece caves in to creditors and stays in the Euro-zone there will be a large and immediate rally.
3. If the creditor countries allow for less austerity in order for Greece to stay in the Euro-zone we will have a  very short rally. In this case we would immediately move to an underweight on equities, especially European equities, as it would call for more austerity reduction across the periphery. This will be the beginning of the end for the euro.

We’ll see this weekend how this plays out and whether any of these predictions come to pass. With this situation as well as many others happening on the global stage, volatility is a sure bet.

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