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Charting Greek Referendum Path

EconMatters's picture




 

By EconMatters

 

Greece missed a payment to the The International Monetary Fund (IMF) of about 1.5 billion euros, or $1.7 billion, on Tuesday which officially put the country in the ranks of Sudan, Somalia and Zimbabwe. Although the IMF is not considered as a commercial lender, and the Fund does not use the term 'default', the inescapable conclusion is that Greece has indeed defaulted. This occurred in conjunction with Greece’s European creditors rejection of a request by Greece for a 3rd bailout at eleventh-hour.

 

The Biggest Deadbeat of IMF

 

As reported earlier today, the missed payment by Greece dwarfs every other deadbeat nations in the Fund’s history, and Greece will go down in history as the first developed country to miss an IMF payment.

 

 

Tsipras Cedes

 

Now that Greece has got a taste of financial chaos and social unrest, the latest Act from this Greek Drama is that Prime Minister Alexis Tsipras has signaled that the government is willing to accept many of the terms of a bailout package that it had earlier rejected (It is like why bother? Greece could have got this done months ago.)

 

Merkel Says NEIN!


But it seems too little too late as German Chancellor Merkel, burnt by months of brinkmanship, said “There can be no negotiations for a new credit program before the referendum.” Merkel's finance minister, Wolfgang Schaeuble, also told reporters that the country has provided “no basis for talking about any serious measures” to break the deadlock.

 

 

Path of The Greek Referendum


So for all likelihood, the referendum is still to take place on Sunday, July 5.  Below is a flowchart by Bloomberg showing possible outcomes of the Greek Referendum.  

 

 

 

 

If Greece votes “Yes,” it might be able to get a third bailout package in a few weeks....till the next missed debt payment, and Tsipras and his leftist Syriza party most likely would be ousted. 

 

If voters say “No,” Grexit could be in the cards, and also means Greek banks and the government would run out of cash very soon compounding the current chaos of capital controls and pension rationing.    


Nevertheless, a "No" vote does not necessarily rule out the possibility of another round of new negotiations and some kind of deal (although I personally doubt the German would go for that).      

 

Unlikely to Survive A Grexit 


In my opinion, Greece inevitably will need to go on some kind of austerity program to steer the country back to economic and financial health.  Judging from the anti-austerity movement in Greece, and everything else transpired in the past few years, it is highly unlikely that after exiting (and without the support of) the euro and EU bloc, Greece would be capable of a proper reform to land on its feet again.    

 

Many Greeks Still in Fantasy Land

 

Tsipras is calling for 'No' Vote in July 5 Referendum that could lead to a better deal , and it seems he still has the support of many Greek citizens wanting to call the bluff of EU, IMF, and Merkel, etc.  Well, when you play with fire, be ready to accept the consequence of a totally burnt-down Greek House, while the rest of the world would simply go on.         

 

 

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Thu, 07/02/2015 - 09:55 | 6261971 nickt1y
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Greece will soon get a visit from "The Gods of The Copybook Headings" As will everyone.

http://www.kiplingsociety.co.uk/poems_copybook.htm

Thu, 07/02/2015 - 08:05 | 6261511 y.detor
y.detor's picture

THIS IS GREECE: Our history is a story of great NOs to huge invading empires in our country. And guess what happened every time: they lost and we won!!!

Thu, 07/02/2015 - 09:03 | 6261736 dizzyfingers
dizzyfingers's picture

Then kiss the effers off and straighten yourselves out. Maybe the US will follow! (Um, of course not, too intelligent for this country.)

Thu, 07/02/2015 - 08:02 | 6261504 NoWayJose
NoWayJose's picture

The author says "In my opinion, Greece inevitably will need to go on some kind of austerity program to steer the country back to economic and financial health." But that is the current problem - Greece has been forced to accept more and more austerity with every bailout for the past FIVE YEARS! And despite early IMF projections of future financial health by 2014, Greece is continuing downward. The ECB and IMF have to accept the fact that Greece has too much debt and not enough of an economy to pay it. Worse is that 92% of these bailouts do not reach the Greek economy - they just borrow from the IMF in order to pay back the IMF! The Greek debt bubble is too big - it will either pop now or it will pop not too far in the future.

Thu, 07/02/2015 - 07:48 | 6261473 MSorciere
MSorciere's picture

Sorry - font + chart do not validate an opinionated spiel.

Thu, 07/02/2015 - 07:02 | 6261389 mianne
mianne's picture

Of course, all the NATO countries, heavily indebted, could have the same fate as Greece if they were submitted to very high interest rates for the risk of never being able to refund the capital of the huge public debt. Let's imagine what would happen if more indebted countries, for instance the USA, that will never be able to refund the capital of their huge debts either, were summoned to refund their creditors, for instance China . It is obvious  that the other countries are not treated as badly as Greece is and that all the speculators in the world seem to have united against Greece . If Greece goes bankrupt and exits the eurozone, debt cancellation for Greece will be immediate and the BRICS, with their new world bank AIIB ( equivalent to IMF for NATO countries) are ready to help for the Greek immediate expenses.  Yesterday, Turkey proposed to help Greece . An optimistic example of a bankrupt country with a better economy outside the eurozone is Iceland. After celandic bankruptcy and a first difficult year, Icelandic economy is improving on its own without being hampered by the unbearable European rules, much better and optimistic today than those of Britan, France, Spain, Italy, Portugal .

Thu, 07/02/2015 - 03:54 | 6261264 cuzzinjak318
cuzzinjak318's picture

look out for a fix in sundays referendum possibly the same operation as in scottish referendum voe rigging on a massive scale i think

Thu, 07/02/2015 - 00:02 | 6260994 Flying Wombat
Flying Wombat's picture

Greek Crisis Awaits Other NATO Partners

http://thenewsdoctors.com/?p=476300

Wed, 07/01/2015 - 23:30 | 6260902 OldPhart
OldPhart's picture

Odious Debt!

Put it through Google Greek translator but the characters don't print.

Wed, 07/01/2015 - 22:46 | 6260793 grunk
grunk's picture

How do the Greeks feel about the way bankers are squeezing citizens into poverty and starvation get a "Yes" vote?

Wed, 07/01/2015 - 22:35 | 6260764 Bingo Hammer
Bingo Hammer's picture

This article is a sophisticated but total peice of bullshit propoganda! (straight from the offices of Yuncker and Donald Tusk)..."Greece won't survive Grexit" oh yeah really, you turds said the same thing about Iceland!!!

To all Greek voters say NO!

To the blood sucking bankers that set you up so you could then be totally financially raped by them!

 

Thu, 07/02/2015 - 07:16 | 6261415 globozart
globozart's picture

unfortunately I have to agree. Even the last line is just fearmongering. Bad quality or payed for. Or both.

Wed, 07/01/2015 - 18:53 | 6260026 messystateofaffairs
messystateofaffairs's picture

Tsipras is a redistributioner, not a wealth creator. He utterly lacks the understanding and competence to craft a Grexit strategy that would rebirth the Greek economy post EU. He now looks weak, scared, pathetic and humiliated after his little false bravado bluff with the Germans, who are equally at fault with this mendicant nation for this situation.

He should have

1. Made a deal with Russia for the gas pipeline and naval base. Let the Russians toss in cheap gas for Greece as part of the deal.

2. Earmark the money from that deal for the existing pensioners.

3. Freeze hiring for all govt depts, allowing attrition to whittle them down, and focus only on basic healthcare, police, basic child education. Any essential new hires are on contract without pension.

4. Return to the Drachma with a path to make it gold backed. 

5. Eliminate income tax and reduce VAT. Dramatically reduce business bureaucracy.

6. Ruthlessly cost cut to balance the budget and force a referendum to increase taxes everytime someone wants free shit.

7. Renege on the EU debt.

8. Spell out these steps to the electorate as his way of navigating a Grexit vote and say he will resign and let some other sucker navigate the shitstorm if the stay in EU vote wins. Thats what I would have done in his shoes.

If Greece blooms economically after a EU exit the Italians and Spaniards are going to get ideas (French won't, they are just too full of shit). Greece is small and has the whole world to trade with, losing effete Europe is a blessing.

Thu, 07/02/2015 - 09:00 | 6261723 dizzyfingers
dizzyfingers's picture

I can't even express how much I agree and hope it happens, but think this is far to intelligent for this day and age.

Thu, 07/02/2015 - 08:08 | 6261519 NoWayJose
NoWayJose's picture

That stuff may yet happen - but remember that he is under an 80% mandate to stay in the Euro. The referendum may free him of that need so that he can do the things you ask.

Wed, 07/01/2015 - 17:52 | 6259780 luna_man
luna_man's picture

 

 

VOTE NO!...BE FREE OF THE CRIMINALS!!

 

like my daddy would say: if it don't kill ya, it'll make you stronger & wiser

Wed, 07/01/2015 - 17:34 | 6259705 HenryHall
HenryHall's picture

This analysis seems to assume that the Euro bloc is the only possible source of financial support for Greece.

Pretty dubious assumption.

Thu, 07/02/2015 - 06:50 | 6261372 doctor10
doctor10's picture

Sweet bunch of bankers. Only going to starve the Greeks for 5 days before a vote on an empty stomach.

Thu, 07/02/2015 - 00:27 | 6261040 Fourmyle
Fourmyle's picture

Wonder what the Greek economy would look like w/o the interest payment overhead. They were growing before the GS offer to make a secret loan to cook the books to join the Euro. Oddly enough, the TBTF are also the ones ultimately recieving the "bailouts" and are influential in demands to sell Greek assets to finance repayments. Could Greece and Europe have been the suckers at this poker game?  Just speculation on my part.

Wed, 07/01/2015 - 19:35 | 6260157 Citxmech
Citxmech's picture

Yeah, this article sounded vaguely like the pimp telling the prostitute that she couldn't find a better pimp and can't survive without protection.

Wed, 07/01/2015 - 23:19 | 6260877 disabledvet
disabledvet's picture

THE ATHENS STOCK EXCHANGE IS CLOSED SO WHO GIVES A FUCK.

Thu, 07/02/2015 - 11:59 | 6260125 EconMatters
EconMatters's picture

can't wait to see a negotiation showdown between Tsipras v Putin, Xi or even Yellen. India and Brazil, the other 2 BRICs would rush right over, and that Crowdfunding for Greece would bail out Greece, perhaps in this life time.   

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