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Does Anyone Really Believe In A Grexit?
The new left-wing government hasn’t wasted any time and at a press conference in Athens, the new Greek minister of finance has torpedoed the existing bailout agreement between the troika (consisting of the IMF, the European Central Bank and the European Commission), citing it has no intention to honor an agreement with an organization which hasn’t been ratified by the European Parliament. This has strengthened the market's belief there will be a Grexit in the very near future.
Cancelling the bailout agreement shouldn’t really come as a surprise as Syriza, the left-wing party which won the recent elections promised the Greek citizen it would escape from the European stranglehold. To show the Troika he wasn’t bluffing, Prime Minister Tsipras appointed Varoufakis as his Minister of Finance, a professor wo’s known to be a hardcore opponent of the bailout program as it stands.
Minister of Finance Yannis Varoufakis. Source
So what is Greece trying to do? It is definitely putting pressure on the European Union to re-negotiate the bailout deal the Greeks got a few years ago. The current phase of that program is expiring at the end of February and there’s no doubt the Greeks are torpedoing the deal now as there’s still a fair few weeks before the deadline expires.
Whereas some people see this as the start of the ‘Grexit’, we aren’t so sure Greece will indeed leave the Eurozone as there are several indications they are just playing hardball. When the ECB announced it would start its Quantitative Easing program whereby it is planning to pump 60B EUR per year in the economy of the Eurozone, Tsipras specifically said he would hope that 'the ECB would include Greece as part of its QE-program'. This obviously raises the question why Tsipras wants to be part of QE if he’d be planning to leave the Eurozone anyway? We do believe he really tipped his hand with that remark.
Secondly, Varoufakis has left the door open to re-start negotiations on a renewed deal and specifically asked the syndicate of lenders to write off a large part of the debt. This probably won’t happen as the majority of Greece’s bailout plan was financed by the other member states of the Currency Block. Can you imagine what the repercussion would be if all these other countries had to write off a large part of the sum they lent to Greece? The effect would be absolutely devastating as every single country would suddenly have large multi-billion euro deficits as a loan would suddenly be evaporated.
So forgiving a large part of the debt is very likely a bridge too far, but the Greeks are aiming high in order to secure something less invasive. They know damn well the Euro-countries won’t accept a large write-down but there seems to be some potential to discuss a longer payback period as well as a lower interest rate being charged on the Greek debt. Additionally, it’s also very likely the ECB would agree to purchase a relatively seen larger amount of Greek sovereign bond to relieve some of the pressure on the country and thus avoiding a Grexit.
And last but not least, should Greece leave the Eurozone, the country will have some serious problems to ever tap the international capital markets again. Its economy would crumble and it would be extremely difficult to get it resuscitated. It’s also unlikely Tsipras wants to go into history as ‘the prime minister who ruined the country’, upsetting every single country in the Eurozone as well as international and national creditors. He’s playing hardball, and Greece will definitely get something out of the negotiations. The only issue is that Tsipras must be able to tell his citizens that it’s a Greek victory over the Troika, meaning the gesture from the Euro-bloc must be big enough to make Tsipras look good.
There will be no Grexit as the sacrifices would be much higher than the sacrifices which had (and still have) to be made under the bailout program. However, any renegotiated deal will also increase the pressure on the entire Eurozone as it will take much longer than anticipated to see a single dime back from Athens. And even if our assumptions on the Grexit-case are wrong, gold once again would prove to be a safe haven as the gold price jumped by $25/oz last Friday when the news hit the wires.
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No mention was made in the article of Syriza's hatred for the austerity program forced on the Greeks by the Troika. Not only will they want a major haircut on debt which they will never ever pay, but will demand the end to austerity.
The article gives some bullshit reasons that a Grexit will not occur, such as the economy would crumble and it would be extremely difficult to get it resuscitated. The economy is not worth shit right now; if things can't get much worse there is nothing left to lose. "It’s also unlikely Tsipras wants to go into history as ‘the prime minister who ruined the country’, upsetting every single country in the Eurozone as well as international and national creditors."
Tsipras can't ruin something that is already in shambles. He is trying shock treatment to get the Eurofuckers to realize that they will never be paid back for the past loans made to Greece and fuck them if they are upset because they should have known better. This constant borrowing by Greece has been going on since Greece joined the Eurozone and was able to borrow incredible amounts of Euro at low interest rates, none of which were justified by the Greek economy or growth potential. What can't be paid back, won't.
Maybe the gas furnaces at Auschwitz should be restarted for the ECB, IMF and Merikel workers running Germany.
Greece has been been pledged once too often. We do the same thing here in the States, To how many parties can they promise one person's labor? Slaves get to pick their masters...
"And last but not least, should Greece leave the Eurozone, the country will have some serious problems to ever tap the international capital markets again."
Balony!!
Once Greece is debt free, the lenders would be lined up at the door to extend credit.
Without its existing debt, Greece would be solvent and able to meet its existing budget committments. It is the existing debt that is causing their insolvency. Once that debt is repudiated they are solvent.
The author cannot do simple math.
Not one mention of Russia bailing-out Greece and taking her under her wing. Interesting...
"Does Anyone Really Believe In A Grexit?"
Is he arresting any banksters?
Then no.
The exit will have to come in the form of revolution.
The banksters need to repay us.
A tisket, a tasket, banksters' heads in baskets ruins their rackets.
The end game is the same as it has been since civilizations started rising and falling. The EU will stay intact, and they will print money until the currency is worthless...then we will have war.
If America was smart, we would make Greece the 51st state and introduce the Dollar as currency.
We all know that anything said during an election is immediately disgarded once a party wins.
There are only four econonic empires---US, EU, China , Russia. Greece will have to pick their patron by Feb. 28th or become another Ukraine. Conversely, standing on their own is not an option for Greece while Ukraine can survive by splitting in half.
They said it diplomatically, but they said it...
FAAK YOU MALAKAS.
The Greeks are not taking anymore money that just ends up back in the Troikas hands.
What they do next is anyones guess. Getting the Troika to fold without looking like it folded is going to be a neat trick considering who is watching this play very intently.
If the scalping begins, it's gonna be bloodier than Custers Last Stand and just as final.
Greece will not leave and EU won't kick them out. The whole financial sector is confused cause they want to short this somehow and make money.
This is now a political battle cause Greece has flat out called out Troika that they can never repay this debt and are insolvent.
Either EU is going to have to deal with this properly and make some proper structural changes in the EU money system (which means Italy and Spain and Portugal are next) or keep extending and pretending until Greece is officially goes insolvent and things get super un-predictable.
9/11 Truth: The NIST “no molten metal” guy posing by steel with unexplained melting (PHOTOS)
The hole was a cut that is occasionally made in a secondary beam to run things like conduit. 9-11 was perpetrated by jihadi muslims. Your only "conspiracy fact" is that the US government took advantage of this tragedy to remove yet more of our rights via patriot act, DHS, etc.
Oh yeah, that also covers Building 7, glad you set us straight that there are no conspiracies within the pristine government(s).
"Types of conspiracies
This indicates that the government is nothing else but one giant conspiracy. After all, the Constitution is still being touted as the law of the land. Next you will be trying to convince me that TPTB have not conspired to destroy the Constitution. You need to wake up and take a sleeping pill for a brain reset. I give you 10 up arrows for your recognition that it all resulted in the Patriot Act, etc. That was no accident, that was a conspiracy.
"whereby it is planning to pump 60B EUR per year in the economy of the Eurozone,"
I wish it was only that.
I don't think anyone knows the ripple effect a Greek exit would cause.
The banks are so fucking leveraged with CDS's, it would be interesting if not comical to see them triggered.
If a shitty little country like Greece can cause the EU demise, then it deserves it.
We'll be seeing shortly who "crumbles". The EU certainly will. Greece will only crumble if it stays to go down with it. A brighter opportunity exists for independent Greece than for the EU. The EU financial system is the only thing I see at the moment in the process of "crumbling". Greece seems to be resurrecting.
". . . should Greece leave the Eurozone, the country will have some serious problems to ever tap the international capital markets again".
This is the big question. Should Greece decide it has no choice but to live within its means, then why not blow off its creditors? Total debt repudiation! Let its banks go bankrupt (surely everyone has withdrawn their money by now) and move forward. Why does Greece need its own banking system, simply allow foreign banks to open branches in Greece. If accompanied by a top to bottom tax and regulatory restructuring, this could lead to a major economic rebound.
Of course, Socialism can only succeed by mooching off the productive elements of society, i.e. the Germans in this case. Paradoxically, if the new Greek government is true to its ideals, then it has no choice but to break its campaign promise and cut a deal with the Troika. But if it's willing to throw Socialism overboard, then it has the ability to totally repudiate its outstanding debt.
In short:
The greeks can choose EURO-socialism or local-socialism. They could choose a third way but socialists never do. They are screwed.
Tsipras clearly doesn't want a Grexit, but he may be forced to accept one. Greece is playing hardball, and the real question is how hard a ball game the Germans and the Troika are prepared to play. Sometimes games result in sub-optimal outcomes for all parties.
I think Sprout is missing a component: Greece is a catalyst. They have infused excitement within Portugal, Spain, France, Italy,
Denmark, and Poland.
Sure, Greece *may stay, but now the "union" has to worry about 1/2 dozen other countries biting at their ankles to leave.
Not all ankle biters are inside the wagons. The former Balkans, except the ones that defected to the EU, such as Croatia, are probably watching Greece with a keen eye. Croatian merchants' revenue dropped 38% immediately upon being initiated into the EU last year. Apparently the Russians and some others don't care for visas to go shopping and on holiday.
IMO, Greece is going nowhere, the NWO crowd will not tolerate backsliding secessionists. Everyone with a brain realizes that this is straight from the IMF manual on how to loot a country and continue the looting of the populace for centuries to come. BRICS have a grand opportunity to collapse their plans, but Greece isn't even a fart in Katrina.
Anyone ever really put a lot of mental energy into exactly why it is that UK still uses the pound as their base currency?
And that is precisely why the Germans and the Troika may be willing to play ultimate hardball, and force Greece out of the union. Making a fine example of the Greeks may be the least expensive option for the EU powers that be.
No. Tsipras values his life. Again---if he tries to Grexit and do a deal with Russia either the Greek army will overthrow him or NATO will do it for them. Ask Yanukovich how well refusing Brussels' poisoned chalice worked out.
Varoufakis has bigger balls by far, but he's not the one in charge.
Oh to be a fly on the wall when Yanis debriefed Alexis on the meeting with Dicklessbloem!
Sprout does not mention the 'Russian' factor or that of China or even India.
There are other 'deals' to be made and had out there. I would not be so passive about Greece staying in the EU.
Indeed. Many are in an information vacuum. One would believe the BRICS don't exist and everyone loves TBTF banks. Russia (who, with China is the Spiritual leadership of the BRICS) was the first Ambassador Greek leadership talked with. Why should be obvious. There is a whole other world of opportunity out there for the Greeks...for Germany and France also...even for America if they can see it.
Tend to agree with SproutMoney. It's still early days, too soon to judge. However, in reading Varoufakis's blog among various sources, he seems to be of the mind that the euro bailout agreement must be renegotiated; exit is nowhere mentioned that I can see, and everywhere he seems to speak and think like a "european" rather than "Greek". Putting this together with Soros' recent visit to Greece, and Varou's reputation as a game theory expert, I am expecting more bailout and certain conditions lifted, with perhaps more infrastructure spending and jobs programs, along with various forms of welfare to be supported. Everyone knows the EZ cannot afford for any of their vassals to "exit", which is why no procedure exists for this.
The final point of Tsipras' 40-point program is withdrawal from NATO, but I wonder if this too may be more a threatening stick than a real intention. We will have to wait and see. Varou may justifiably feel that he has more political power within the EZ than out of it, at least at this point. It makes sense to raise the rhetoric when you have the upper hand, as Greece does, since ECB cannot afford an exit. Varou may simply be playing games, putting the fear of God into the negotiators sitting across the table.
Their outstanding and believable rhetoric works just as well for hardball as it does for real intention. With a mandate of about 30% of voters (not sure how much of the population at large doesn't vote), I am not sure that Syriza can be certain of popular support if their economic position gets tough, which undoubtedly it will. It would be in the ECB's interests, for the sake of propaganda, to make it look as though everyone is still in confusion even as agreements are being harmonised behind the scenes. That little handshake pantomime was a bit too showy for reality, at least to my eyes. The MSM is also very eager to spin agreement, whereas if Varou were considering "exit" then I'd expect far more demonisation in MSM language. (I'd expect to hear 'regime change' suggested, dark references to Putin, and possibly threats of war to really get the sheepulation frantic for "leadership".)
I appreciate what Tsipras and Varou have said and written to date, but there is a big gulf between "in" power and "out" of power and realistically it will take a long time and possibly some other favourable events (e.g., a higher profile for the SCO, or another country or two getting antsy about their NATO membership) before we will be able to tell for sure whether Tsipras and Varou really are for "the people" or not. My default position is NOT, since they are politicians and I can count on the fingers of one hand the politicians I know of who actually tried to represent the people against monied special interests. In politics the ratio of sellout:integrity is probably around 1000:1. This bears watching for awhile, but I can't get excited until I see some action that supports the rhetoric. Since it is nearly certain that the ECB will blink, it may be awhile before any action need be taken by Greece's new government.
Most people not in Greece have no idea what the Greek people are thinking. I was there for three years in the '60s and lived on the economy. I learned street Greek which is different from formal Greek. The people are different than in the US or Europe. How many people in the US now believe "Give me liberty or give me death", "Damn the torpedos, full speed ahead"? Damned few. There are many Greeks that I knew who believed "Molan Labe" or "Come and Get Them" as part of their way of life. Without understanding a bit of the Greek mentality, it is quite possible to analyze the situation as a European or American and the Greeks are not the same. Neither better or worse, just not the same. Greek exit may very well be their their fate but it preserves their 'ego', 'manhood', whatever it is that I cannot put a name to it. It is impossible to argue without considering that Greeks have different values than us.
What if Z. Germans play ultimate hardball too, and tell the Greeks to either accept their lot or Grexit? Ultimately, whether or not Grexit happens is not up to Greece.
It's all a game. There is no question of Greece defaulting, they already have.There is no possibility of them paying what they owe, or any part of it.
The only question is how long can Europe keep the farce going before the inevitable reset?
Greece has defaulted or inflated their debts to zero about every fifty years for the last 500 years. Why should this time be any different?
As for ruining the country don't make me laugh. Every time some country defaults they say the same thing but within two years the big banks are lending to them as freely as ever. They charge higher interest but what difference does that make if you never pay it?
The rise of Germany after WWII is an example of what can occur when the right path and right actions are chosen. Why can't the German example be replicated?...
Some time ago a European country approached its creditors and said it needed a debt restructuring in order for its economy to recover. Sounds like Greece but in fact it Germany who in 1953 approached France, the US and Britain about its $32 Billion debt. It was agreed to write off half the debt and spread the repayment of the remainder over 30 years…..and now in a stunning act of hypocrisy Germany does not want to forgive Greek debt. Why can't this example be replicated?
Most people would rather not act like Germans. Most of the German AG success is similar to (name your favorite, I would name Goldman Sachs but there are many other). They play hardball (or cheat if you don't like them). Swap German cuisine for French?
Because it would require hard work, an honest government, and planning more than 2 months ahead.
You need to do more research if you think the German governments are honest. Deutsche Bank holds most of the off balance sheet special vehicles.
The EZ will lose far more from a Grexit. They will have to give way to Greek demands.
If football parlance, I think that means Germany are two - nil down after the QE announcement last week!
Dexit - Gerexit - what sounds better?
Not true. The EZ rulers stand to lose from a Grexit, but they stand to lose more by giving in to Greek demands. If they give in to Greece, Spain, Ireland, Portugal and Italy will all be demanding better terms. There will be no end to it. Their only real options may be to force a Grexit, or to come up with a plan that is not specific to Greece and allieviates the financial pressure all across the EU.
If Dexit stands for Detroit's exit from the US, then I'm all for that.
This article is all wrong. No one is sitting around hoping Greece leaves; least of all Tsipras he's said so much himself. His plan is simple: blackmail. Force Germany and the others to drop the austerity measures like privatizing ports and the utilities. The Germans will only allow so much before they balk at paying for bad behaviour.