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Greeks Split On Greferendum As Credit Suisse Says "No" Vote Defies "Rationality"
With just two days to go until Greeks decide their fate in the eurozone, the country is split down the middle, a new poll shows. The survey, commissioned by Bloomberg and conducted by the University of Macedonia Research Institute of Applied Social and Economic Studies, shows that “43 percent intend to vote ‘no’ to reject the austerity demanded by creditors in exchange for financial aid, while 42.5 percent back a ‘yes’ to accept the conditions.”
Bloomberg goes on to say that support for a ‘no’ vote has dwindled since Tsipras first announced the plebiscite last week, which seems to suggest that the bite of capital controls has quickly forced many Greeks to reconsider whether the benefits of standing firm in the face of overbearing creditors truly outweigh the economic costs of an EMU exit.
The narrowing lead for the “no” side comes as IMF research appears to support Tsipras and Varoufakis’ contention that any feasible Greek deal should include debt relief.
As we said on Thursday, the report (which was prepared prior to capital controls and the banking sector meltdown) shows that any deal which includes creditor concessions on fiscal reforms would mean Greece's debt load would have to be written down, as the country would need at least €60 billion in new financing. Subsequently, the media and sell side chimed in. Here’s Barclays for instance:
The IMF released yesterday a document with a revised debt sustainability analysis for Greece. The document basically argues that OSI is a necessary condition in order to secure sovereign solvency with a high probability. This means that before the IMF re-engages in any lending activities with Greece, OSI will be required in the form of NPV debt relief.
The timing of the publication of this report it is very important. Debt relief is something that the Greek authorities have repeatedly demanded; therefore, in a way this report can be interpreted as the IMF backing the Greek government's demands. By extension, it could also be interpreted as supportive of a 'No' vote, which is what the Greek government is campaigning for.
We’ll see over the weekend, if the “no” vote is bolstered by the IMF’s findings.
Meanwhile, Wall Street continues to speculate on what happens in the event of a “no” or worse, a tie. The following is excerpted from Credit Suisse "Greece: A Thread In The Labrynth."
* * *
The Result Of A "No": A Live Test
We believe that in the case of a ”No” vote in the referendum that the creditors will reject any further deal with near certainty and the only outcomes are either a systemic crisis or a contained idiosyncratic crisis.
A particularly bad scenario for Greece would be some sort of split vote, e.g., 51% voting “No”. We think Tsipras would likely claim to have won the backing of his policy by the electorate – assuming he campaigns for a “No” till the end – while nearly half the population would have voted in favor of the creditors’ deal. This could cause unrest domestically in Greece, while the creditors would probably be less inclined to acknowledge Tsipras’ “victory” under such circumstances. A relatively low participation rate would further reduce the credibility of a marginal “No” vote, in that regard.
We again want to be clear: “leaving EMU” is not a policy choice and, if enforced by referendum, materially reduces Greece’s freedom of action. Introducing a new currency is a pipe dream and the likely result is a broken financial system reliant on a neighbor’s currency (the euro) and banking system.
If the result of the Greek referendum is a “No” and the situation is not immediately remedied (which we would not expect), the Greek people will probably have taken the opportunity to illustrate how illusory the whole idea of “exit” actually is. How that unfolds determines whether the situation systematizes immediately. This is because the choice is not “do you accept the core’s terms your government has rejected?” Rather, it is “do you want Greek banks to function independently?” and, de facto, do you want to be able to use the cash machine tomorrow? This is the nature of “Grexit”; it is not a choice to circulate a shiny new devaluation mechanism, it is a decision to reject the (local, to begin with) financial system and start again.
We have always pointed out that the new “currency” mismatches involved in any attempt to exit the euro would be so "toxic" for the banking system as to make it not a practical alternative. It is certainly not a way to avoid default. Rather, an attempt to exit is a way to default, at the expense of making that default systemic and so more costly. We are seeing this right now, with anecdotes of large dislocations and the reality of a closed banking system.
This fact seems to get less than its fair share of attention. The Greek banking system is closed. How does it reopen given a “No”? So “No” should be a dominated policy option and a properly informed Greek public should rationally vote “Yes”. Yet we cannot confidently give it more than a 50:50. The closed banking system imposes real pressure and a deadline. The 20 July date we have always pointed to now has real teeth; three weeks is the absolute maximum we would expect Greece to be able to function in this state.
The “loss of sovereignty” resulting from this dilemma could be a dominant consideration leading to an irrational outcome (“better a day as a lion…”). As always, we have to be VERY careful with the “rational player hypothesis” in these situations. And the core pointing out that the question can be reframed as “do you want a banking system”? and “do you want to stay in the euro” could be criticized as "moral blackmail", but it is the reality of the implications of having joined a currency area. The time for these concerns was in the run-up to 2001. We are all learning about these realities and Greece could again be an illustrative test case. We stick to our view that “nobody leaves” and any new drachma (which we strongly doubt) would effectively be a transitory default mechanism on the way to an economy that was euro-ized without the votes on the ECB GC. We could call it the “Panamization” of Greece. But where is the 13%-capitalized banking system which is required going to come from? At a minimum we would see €40 billion of untainted capital being required. Some of it could come from the existing capital structure under resolution but we believe that the balance could not come from Greece itself (a state in a serious state of default) without triggering immediate collapse and returning to the path of the new arrangements being a default vehicle on the way to euro-ization only now without a domestic banking system at all).
The far more likely outcome, in our view, of an attempt to leave (i.e., of a “No”) is a banking system that can only open under foreign (nationalized) ownership. This seems to be a very likely step given the apparent intention of the core to honor guaranteed deposits. But all of this would of course be contingent on some form of cooperative outcome. In the absence of that—and relations are already manifestly more strained; a change of government may help—we would have to suspect that Greece’s EU membership would be under threat. And as this situation becomes ever more political, that would be a huge issue well beyond our scope but which highlights our view that the mechanism for systematizing this situation is political not financial. It seems unlikely that the 13% capitalization needed to rebuild a banking system could come from a non-Western power, but the concern obviously exists.
* * *
Summing up, Credit Suisse believes a "no" vote is effectively a vote for economic catastrophe. The banks would, for all intents and purposes, have to be nationalized by Germany (which, given the Greek banking sector's complete reliance on the Eurosystem for funding, and given Berlin's TARGET2 position relative to the rest of the EU, would simply be to make official what has already been going on for years), and the (re)introduction of the drachma would not only be a disaster, but is in fact an unworkable "pipe dream."
In short, the bank says that if Greeks were "properly informed", they would not, in their right mind, vote "no."
So perhaps we have a new way to characterize Sunday's vote: a sanity check for the Greek populace.
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Mother Fuck Credit Shit and all the other mother fucking MoneyChangers...
FUCKING BITCHES.... thats with an "S" so u know i mean ill will.........
Um yeah.... the country with the oldest currency in all Europe but releasing a new currency is "a pipe dream" according to the banksters.
IT MAKES NO FUCKING DIFFERENCE WHAT THEY VOTE NOW
Cause Greece is broke and will never pay back what they owe.
The only question now is HOW MUCH WILL THE TROIKA LOSE RESTRUCTURING GREEK DEBT?
Then there's the bigger questions of Spain, Portugal, Italy...
It does make a difference. If they voted no and then choose to quit the EU and go back to a drachma they would be taking destiny into their own hands instead of laying their fate on the butchers table that is the Troika.
I think they will vote yes. The Greek people don't have the courage to face temporary uncertainty. They will kick the can down the road because that provides the most predictable near time future and hope that maybe something else can be done. The elites gain more control and the people fall into the abyss.
Anyone who loans a country money past 25% or so of GDP is an idiot and deserves to get stiffed. Borrrow more? What?
You got me there Soul Glow.
That is a big difference for the Greek people but not for the Troika losing a big chunk of cash.
Unfortunately, me thinks the New Drachma will be DOA worthless and cut Greece off from importing anything with it.
However, Greece will also attract more foreign businesses due to its lower labor costs..
What Greece needs most now are jobs. Even credit card call centers would help.
Sanity check?
Leave it at the door.
Dying in slavery is sane.
Why dont they all agree that this imaginary debt from interest doesn't exist and all start producing goods and services that people need and start using silver to settle transactions. It's like all this talk is just an illusion, that we are dependant on some unknown douchers to loan us fictional currencies that they have unlimited access to (and we do not). Its like from the elites point of view, they say, these are your two choices, option A or option B, when really it should be like.. how about fuck you and we will just run our own country because we don't need you!!!
- Slimy Corporate Dick Head
Propaganda Boogeyman! Boo!
Yeah...who wants their own currency and sovereignty?
So much better to live hand to mouth at the mercy of the Huns.
I know you are being sarcastic, but you have unfortunately described the human condition. The EU polititians are playing this vote very well, invoking uncertainty, appeals to authority and even images of death at anyone who might vote to defy them.
In the west the term "slavery" has a particularly bad name, but if you separate the living conditions from the label most people would welcome a large degree of control over their lives in exchange for not being responsible for the results of their actions.
If this is indeed the start of the big worldwide meltdown, the libertarians in the crowd would do well to remember that the masses aren't going to react in ways that even remotely resemble what they think of as rational. And this will be an ongoing process where each time the people come close to freeing themselves, they will turn right back into their captors waiting arms again and again.
Prepare yourself mentally to watch that.
Depending on the severity of events, I would expect freedom and liberty as the last things to expect from the masses and government.
After all, man's default setting is that of a hunter-gatherer.
they need to leave the Euro and have more debt forgiven than the current offer. but it must be on an orderly basis. To flee in the manor they may go if the vote is no is economic suicide
Split=ripe for manipulation and hanging chads.
Greeks will do the right thing and vote YES.
Down votes == ZH sheeples, conformists, libertarians, nihilists etc
You're crying like a little girl who has scrapped her knee.
I forgot to add frotteurs.
So if it's a yes vote, does that mean all the greek yes voters were paid govt trolls, shilling for banksters, to bring about the globalsits NWO? They'd have to be, wouldn't they?
The evil bastards are everywhere!
Just a different choice by those who desire to be ruled.
One of the 99% that are dupes.
Central bank paid propagandists trying to extort yes votes using the usual armagedon tactics. Total frauds.
Let me get this straight: One of the bankster extortionists who is part of the cabal that is economically raping Greece to death is now saying that if Greece doesn't play along with being endlessly pillaged forevermore, then that "defies rationality." Do I have this right?
Kind of like when a robber sees you reaching for your gun instead of your wallet, and they go "but that defies rationality" just before you let loose with a .45 to the chest. Funny thing about robbers, they never really understand that once you start playing the game of "your money or your life" sometimes the other guy is going to react in unpredictable ways. Ways that can result in things turning very bad for you, very quickly.
the definition of rationality by the cabal in power : our way of life is NON NEgotiABLE.
Government of the "Oil-igarchs", for the Oligarchs.
Very astute and entertaining.
Gee, phyzz silver sure is cheap right now. Greece has 112 tons of phyzz gold (reportedly). Current paper gold/silver ratio today is like 74:1!!!!!
I dunno...why not trade in a bunch of that phyzz gold for about a 70:1 return on phyzz silver???
Start minting 90% silver drachma coins in denominations of I dunno...something simple which has always worked for me in the past like:
dimes, quarters, halves, and singles??????
Maybe print some redeemable notes for gold or silver in higher denominations like 5's, 10's, 20's, 50's, 100's, etc.?
Use some of the other phyzz gold left over for gold coins maybe????
They could write a law called the "Coinage Act". It wouldn't have to take that much time since something like that which worked really well in the past has already been penned and is readily available for the Greecers to read online:
https://en.wikipedia.org/wiki/Coinage_Act_of_1834
I don't think plagerism would apply in this case if Greece adopted a similar monetary policy. And it worked very well for a country with a much larger population than Greece has at just 11 million right now. Would there be some issues? Some bumps in the road? Would some people not like it? Well, that's life right? And their lives (as well as the lives of billions of others around the world) are pretty fucked up right now by using this failed fiat system. As bad as it is for the Greeks right now, I don't think switching to a sovereign bi-metal monetary system of silver and gold is going to hurt them much worse. And over time their economy will stabilize and actually be valued by others in trade since their system will be backed by physical precious metals. Sounds real fucking crazy, I know...but it just might work....
Just sayin'...
A no vote is perfectly rational.
what's the choice between unsustainable debt?
I thought CS' opinion was bullshit. They simply assert, "Introducing a new currency is a pipe dream..." without any attempt at an explanation
as to why this is the case, usually a sign of BS. At the most basic level, money is simply a medium of exchange, having 'Drachma" written on
notes and coins instead of 'Euro' does not mean they cannot be used in this respect.
Aisde from that, if I ever see another "What Happens Next In Greece", flow diagram it will be too soon.
My guess would be the currency is a pipedream because trade partners, and Greece needs to import food, would not want it.
They simply cannot walk away without further credit being extended to them short term. Even Tsiparas seems willing to concede as much.
If they had to recap their banks I don't think they would have any choice.
I read PCR's synopsis of Greece's situation. According to his assessment, anything less than a NO vote is just an continuation of the status quo. I hope the Greek people understand this. As Obama says, it's time to eat your peas. True for Greece, Italy, France, Spain and us, the good old USA!
A yes vote is not simply a continuation of the status quo. The bankster will want their kilogram of flesh and will delight in getting it.
Analysis written by banks should be taken with a grain of salt and should be read as what they are: Attempts to gain influence over situations which determine the profit situation. Banks are likely not the ultimate winners in any OXI scenario and therefore it is absolutely no surprise that the are strong "nai" sayers. For the population any bank statement on the situation is easy to read: Do exactly the opposite and it will benefit the people.
Right on!
Of course they want to stay in the bloc... up until now its been debt-base dskittles and unicorns. Basically, they are voting away their sovereignty the same way all borrwers transfer a bit of theor freedom each time they borrow and live beyond their means.
holding bank deposits hostage is a scumbag move.
Yes Primary Dealer...you appear to have omitted the extent of your own losses in the event of a "no"...talk your book much?
In the end a drastic cut will be made to the debt as long as Greece agrees to leave the EU.
Credit Swiss and SCB stand to make huge losses from a falling Euro.
These guys in Switzerland have constantly 'chocolate' in their faces , who follows what they say.