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ECB Board Member Says Introduction Of Another Greek Currency "Most Realistic Scenario"
ECB Governing Council member and Latvian central bank chief Ilmars Rimsevics — who earlier leaked that the ECB's new haircut on ELA for Greece will mean the ailing banking sector must now post "a third" more collateral — says the most "realistic scenario" is now for Greece to introduce "another currency."
- ECB’S RIMSEVICS SAYS INTRODUCTION OF ANOTHER CURRENCY IN GREECE IS MOST REALISTIC SCENARIO, MAY BE ONE LESS EURO ZONE MEMBER IN FUTURE
Rimsevics also says Sunday's referendum outcome means Greeks have effectively "voted themselves out of the eurozone." Here's more, via Bloomberg:
"The Greek nation has been brave and has voted itself out of the euro zone," Ilmars Rimsevics, governor of the Bank of Latvia and ECB Governing Council member, says in an interview with Latvian state radio. Latvian central bank governor and ECB member Greece has voted itself out of the euro zone after a referendum on Sunday when Greeks overwhelmingly rejected bailout terms proposed by international creditors, Latvia's central bank governor and ECB member.
“We see that one country that has not fulfilled its promises, that has not done the necessary home work, some day they could be outside the euro zone and that means that the euro zone together could be stronger.”
As a reminder, here is Credit Suisse's take on the prospects for the introduction of a new "devaluation mechanism":
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.
And here is a bit more color from Barclays:
How long Greece can stay in the euro without a financial assistance programme will depend on the ECB’s willingness to continue to provide liquidity to its banking sector and the consequence of a default on the bonds held by the ECB in its SMP portfolio on 20 July. If there is no agreement on a programme, the ECB will shut down ELA no later than 20 July. Banks will then not only be illiquid but would then turn insolvent. As a result, the lack of financing would trigger a collapse of the Greek economy. This situation could not last more than a few days, beyond which the Greek government would have to decide to take back the control over the central bank of Greece and force it to provide liquidity support to Greek banks, therefore printing de facto another currency. This would clearly be a violation of the Treaty and would certainly put Greece outside the monetary union.
After a potentially prolonged period of issuing EUR IOUs to preserve the country’s limited supply, Greece would eventually have to issue its own currency, a “new Greek drachma” (“NGD”). We think the NGD will depreciate sharply on creation given the high degree of economic, policy and institutional disarray. Greece’s real effective exchange rate is undervalued relative to its long-term average including EMU; but it is about 6% (0.6 standard deviations) overvalued relative to its pre-EMU average (see Figure 2). However, post-exit depreciation is likely to be an order of magnitude (or more) greater. First, an overshoot would be likely due to uncertainty over fair value. Second, we would expect that any Greek exit would be accompanied by a default or standstill on all existing external obligations, limiting Greece’s access to capital markets and attaching a large risk premium to all government-issued liabilities, including currency. Third, private sector external obligations that could not be redenominated would balloon in NGD terms as the currency depreciated, accentuating onshore demand for hard currency.
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Greece will be made an example of in case others get the idea of defaulting on their unpayable debts
In an editorial published Monday, the Wall Street Journal worried that Merkel might eventually “flinch” in response to the vote and offer some concessions. If this happens, the Journal warned, “The message will be that Europe’s other debtor nations can also use political extortion to block pro-growth reform… Vote to reject the reforms that creditors demand, and the creditors will reward you anyway.”
“This political contagion,” the Journal continued, “is a far greater threat to the integrity of the euro zone than is the immediate fallout from a Greek financial crisis or even a Greek exit from the currency block.”
What does this mouthpiece of Wall Street fear? That any concession to the democratic will of the masses will only encourage workers throughout Europe—and within the United States as well.
http://www.wsws.org/en/articles/2015/07/07/pers-j07.html
I bet there's some covert aid from Russia making it into Greece these days.
Putin is just waiting for the ECB to be done with Greece before he bails them out.
Greece will be accepted into the BRICS economy by next week.
You sir, are a true optimist.
exactly. that's even more ambitious than getting an 11th hour bail-out deal done on at lest the same if not better terms than the previous latest "offer". likely it will be even worse terms. To become member of the BRICs bank, Greece ought to pay in some money, no? Otherwise, why should the BRICS give away euros or $$ to greece? Which, after all, still is a staunch NATO-member and has so far agreed to all the anti-russian sanctions. Why should Putin spend a single dime on them?
Unless a pipeline deal coupled with denouncing NATO has already been made behind closed doors, but yes, very optimistic. What exciting theater that would make. either way, the greeks will be going back to work in order for anything to get fixed.
Thanks, but this possibility was written a while ago @ redefiningGod.com. It rings true to me.
(P.S. – 6 July 2015) – Isn’t it convenient…
> that the emergency Eurozone Summit was scheduled for Tuesday (so it won’t interfere with the BRICS Summit on Wednesday)?
> that the ECB and the commentators “see Greek banks coping to Wednesday [the day of the BRICS Summit] without more aid”?
> that the whole Syriza vs. Troika drama has drawn out over the past six months only to culminate with a Greek referendum just 3 days before the BRICS Summit?
Those are some uncanny coincidences, don’t you think?
Sure, but that does not change the fact that is has not happened yet.
Will another conspiracy theory become "conspiracy fact"?
Place your bets.
The BrICS bank isn't ready yet to do anything. It MAY become operational by the end of the year, at the very best. More likely they need another year.
And I have serious doubts that India and South Africa see much use in helping out Greece, anyway.
...
You are under the possible illusion that Putin and the PROC are not part of the OWO plan and many of the stages over the years have been thoroughly planned.
I know it sounds far-fetched, but you need to go to Ken's site and read his theory from the beginning. EVERYTHING falls into place.
... I had posted it earlier on another thread ...
... ... Mr Tsipras might be playing his cards right ... if he 'begs' <nudge, wink> ... and got diddly squat, the pivot would be towards BRICS ... there might be a Russian play in the offing ... >>> "Greece may apply for BRICS bank, but not discussed officially – Putin's aide" >>> http://rt.com/business/272083-russia-greece-brics-ushakov/ ... and who knows about Saudi's pivot towards Russia (the largest foreign investment yet in Russia @ $10B) >>> http://rt.com/business/272104-russia-saudi-investment-partnership/ ... only Allah would know if the Saudis would like to get in on the Greece bailout via the Russian chessmaster ... the report says ..."... The Russian and Saudi Arabian funds’ partnership does not exclude the possibility of investment in other countries." ... well, anything's possible ...
It's all crap talk.
There will be a deal. There will not be an exit.
The EU is terrified of the consequences, Merkel is terrified of redrawing Europe's geopolitical map and Tsipras contrary to the result of the referendum which basically says Greeks have reached the "fuck it" point is a committed europhile.
No exit will be allowed until the people themselves force it with blood in the streets. We are almost there but not quite there yet.
The Eurozone finds itself in a catch 22. A deal would ensure the successful rise of Euroskeptic parties across much of Europe, ranging from parties of the Progressive Left like Podemos to neo-fascist parties like the French National Front.
Exactly !!!
Push them out of the euro and watch them grow three years later on the back of a devalued currency, and have others want to follow
Or
Give them debt relief and open the road for Podemos to win the elections in November in a landslide and come calling for an end to austerity and debt relief. And they are not afraid to say the word "exit" like Tsipras is
The Eurocrats have painted themselves in a corner.
Those baltic countries and Poland are a true 'benefit' for the European union. Highly nationalist, russophob, with no sense for solidarity within europe, always just looking at their own advantage and acting as lapdogs of the USA. And those guys from latvia, having just entered teh Euro recently, feel now the need to teach other countries lessons.
I can't stand those estonian, latvian and lithuanian fascist and racist warmongering assholes anymore.
In 10-15 years, they will regret having ever joined the Euro. As Greece is experiencing right now.
OXI!!
+ 1,000 especially for the fascist assholes remark
estonian, latvian and lithuanian ordinary people did not even have a chance to vote
The non-estonian, non-latvian, non-lithuanion nationals living in those three countries hardly have ANY democratic and voting rights at all! Talk about huge political dioscrimination in thos countries of upto one third of the entire population - something that runs counter to the basic principles of the EU, at least as they are printed on countless papers. But hey, nobody cares in Brussels, paris and Berlin- yet.
"The non-estonian, non-latvian, non-lithuanion nationals living in those three countries..."
why don't you spell it out? They are Russians, aren't they? Let me guess: you live in a country where non-nationals have voting rights? if yes, which is it?
Very correct sir! This eurofascist theaches lessons without even knowing wht Europe is about given its own country-s history not to speak of a not so long and bright democratic tradition. But of course he has done all homework and know feels he can go out and play..
Wish we could havesome sort of awakening in Italy as well but as a matter of fact nazi eurocracy is at the moment preponderant and probably nothing will move before TTIP is signed. Then US might have some interest in keeping us alive..
There is no wisdom or benefit in Russia bailing Greece out. Instead Putin will wait for Greece to default at which point any aid he sends will go directly to the Greek people instead of paying off creditors as was done the first time when the crisis hit under Papndreou.
Nuland anybody?!
Yes yes, especially now that banking and finance have transferred all the risk to everyone else via BAILOUTS...
God forbid these useless fucking "rent-seekers" actually have to work for a living again.
Fuck em.
In your opinion what happens to Slovakia, Slovenia, Estonia, & Malta? If there exposure to Greek debt is as significant as the articles previously published on ZH, how does Schauble convince his constituents in Germany to bail out these EU countries?
I do not disagree with your assessment of the Euro Zone being anti-democratic...I am interested in your opinion of how the Eurogroup bundles a series of billion EUR loans to bail out these nations - Do you not think that ther German citizens will say enough is enough?
The rethoric in the German media strongly favors Greece exiting from the euro. Likewise, Wolfgang Schauble's approval ratings among the German public are higher than Angela Merkel's.
watch for travel between iceland and the piigs to prepare for the escape from the eurozone nazis.
it makes sense for them to withdraw from the eurozone and pay their outstanding debt with new devalued currency. inflation is the creditors' friend.
nice dive for gold
Yawn, freedom comes at a price, some want it others not so much... The story of man.
Make it a Gold backed currency and watch the euro banksters shit their pants.
All this faith in a socialist/communist basket case of a regime...
Actually if Greece scraped together a measley $5 billion and put in orders for silver it would send a bolt of lightning through the system as well as give it a tidy profit in addition to having a really decent currency.
“We see that one country that has not fulfilled its promises, that has not done the necessary home work, some day they could be outside the euro zone and that means that the euro zone together could be stronger.”
huh?
he's apparently got some greenspan in him
Really? Cutting out the weakest member wont make the euro as a whole stronger? Of course it will, in the long run.
You think Greece is just the problem?
Might want to keep an eye on Italy, Spain, Portugal and France.
Let Northern Europe keep their wet dream to themselves, as it should have been right from the outset.
Drachma Bitchez'
Now, crawl into bed with Russia/China and kiss-off those Brussel Faggots! You don't owe them shit...
Yes, yes, "ring fence" them with paper that nobody wants.
I seriously hope that the Greek people have started working within their own underground/black markets and are arming themselves because the E.U. will still try and come for any remaining real resources in Greece. The Greeks could also rent pipline space to the Russians, but either way the useless paper-pushers in the E.U. want their fat rent checks (call it what it really is folks) as these bankers/financiers certainly don't want to ever have to actually work for a living, like everyone else.
I see the Brussels/Frankfurt strategy here.
Let Greece exit and deliberately make them suffer even more to show the other peripherals that exiting would be a bad idea.
Sacrifice 1 to keep the other 18 sheep in line. Apostasy is to be severely punished.
I hope Greece defies the manipulative and tyrannical forces in Europe and it shines and shows that exit is possible, and workable. It will take a hardened young generation to make it happen.
They may have trouble explaining this strategy about three years down the road when all the peripherals start to look at Greek growth with envy.
The end of euro is neigh, and not a day too soon.
Just have Latva print their own currency instead...
LoL yeah,, this is funny coming from Rimsevics because he's going to hang Latvia out to dry, sad thing is that most of the 2M Latvian peasants have no clue as to how much pain they have coming.
http://market-guru.co.uk/euro-contagion-to-see-0-85-eurusd/
Euro to 0.85
A reasonable hypothesis. The Euro will collapse, followed by the dollar...
The Japanese will bring their enemies even closer and cut a deal with China, saving what remains of the Yen...
you get it. japan is just waiting for the opportunity to come home to asia and end the occupation.
and what about Latvia ? oh well there was no referendum and people voted with their feet - 3rd of population emigrated to the western europe
"people voted with their feet - 3rd of population emigrated"
Before EURO in 2011 population was 2 070 371
Now in EURO zone 2014 population was 1 997 500
https://en.wikipedia.org/wiki/Latvia
I thik you have some math problems.
People in Latvia had referendum where they approved to join EU. All EU members are in line to join EURO zone when they fulfill criteria - so some choose not to fulfill them on purpose just to avoid joining EURO zone - some want to join and does what they can to fulfill those criteria. Like Greeks who fraudet data and now look what happened from that.
Regarding demographics you should worry more about Russia: http://yaleglobal.yale.edu/content/russian-demographics-perfect-storm
Those troubling demographics are in no way limited to just Russia.
1) in 1991 when Latvia got independence its population was 2,663b
from then going forward it was steadily declining now standing at 2b
If you emigrate from latvia but do not report it to migration department then you are still counted as Latvia resident
2) Latvia had a vote on EU membeship but never on introducing EURO
and now that freak Latvian central bank chief Ilmars Rimsevics is teaching greeks ? OMFG
2) Latvia had a vote on EU membeship but never on introducing EURO
Yep, exactly correct.
1.) Many EU coutnries and Russia also has decline in population. Also many russians went back to their homeland. And many went to England, Ireland to work and live there - that is privilage in EU - you can travel without borders in EU. Get expierience and come back if you want. In 2011 there was population counting and you had to be at home - so - no. Data is correct.
2.) There was no needed another referendum - we already decided in 2003 to join EU and EURO zone when we will be ready to fullfil criteria.
we already decided
Speak for yourself potato boy, my family members wanted no such thing. Latvians are going to be screwed.
Get expierience and come back if you want
LoL, after gaining experience no one is stupid enough to go back.
b= billion. Get your facts straight.
Yale source seriously ? Unverified and agends promoting sources wont going to show you the real demography of Russia . Unless you want to believe what they are promoting it because you are an idiotic bot .Russian demography is improving and much better birth rate than europeans . Check Forbes your doubts will get clear troll .
Any new Greek currency will be crushed by the banksters if the Greek debt remains denominated in Euros. If Greece gets their debt switched to drachmas, then the banksters will be hurting themselves if they trash the drachma.
precisely why those rent-seeking scumbags are doing everything they can to keep Greece in the E.Z. and the Euro.
Greece is only the beginning of the huge unwinding of the global ponzi debt shitshow.
The world is swamped in debt, we all collectively have been living beyond our means, and the day will come to pay the pied piper....err...default. At least for Greeks, it has come first. Good for them.
Greece is the whipping-boy for the sins of Europe. What would they ever do without it?
Greece should use the Yuan, China prints them by the trillions.
"ECB Governing Council member and Latvian central bank chief Ilmars Rimsevics"
LATIVIAN....
I wish that those f*cking small people of those f*cking small countries would know how to keep their big mouths shut.
Precisely - completely insignificant listtle piece of land in the middle of no where whithout future and hope
you mean like israel?
If you want to know what happened in Greece and why it is coming your way soon Thomas Jefferson foresaw it all 200 years ago “If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered”.
Perhaps, but the debt, and human population is still growing exponentially...
I see this as more of a global Weimar event coupled to a global "let the majority eat cake" monetary policy event...
Demographics and the laws of Nature and physics are starting to re-assert themselves. This happens very slowly, then all at once so hedge accordingly.
The thing is no one really cares In Europe (mostly German and French) about what a xenofobist country like Latvia and its people has to say about the future of any country in Europe. He can carry on posing no one will listen
In that the rich would all just keep their money in Euros, hard to see what the point would be.
Oh no, hold on, I get it, so that they will be able to tax the poor.
Hey Tyler,
Did you find out if the leaks are arranged or not? Either case, the ECB is telling that if Greece can pull outside support from powers like Russia or China then the powers and the ability to seek rent will get diminished.
Tyler, you have now started to look more like a news organization. I am doing you a favor... am writing "The death of capitalism". Whether it is an irony or a sad truth... you decide.. but it is now a work in progress.
http://just-a-thought-from-thinair.blogspot.com/
No new proposals from Euclid Tsakalotos, round 2 of the game is on.
First you default entirely.
Issue a new currency.
Then we bring you into BRICS and a 'development' loan, and trade deal.
And the entire Russian navy gets shore leave on Santorini.
Every time I see OXI I think of the Billy Mays, the infomercial guy.
Oxi - CLEAN HOUSE.
Latvia has strong culture roots:
https://youtu.be/-PDSSoqaCp0
And way of life that many still hold on to:
http://www.lituanus.org/1987/87_3_06.htm
Riga, capital city is getting full of tourists that appreciate it's buildings, culture, food and entertainment:
https://youtu.be/HOTLkZCCqaI
But there are other beutiful cities too: Sigulda, Cesis, Jurmala, Ventspils, Liepaja etc.
And Latvia is very clean - 2nd greenest country in the world:
http://epi.yale.edu/case-study/what-makes-latvia-leader-2012-environment...
We even have a national day when we all go out and clean up forests, beaches, help other people etc.
https://youtu.be/RNN1Z3fB98U
We love people and will stand for our country. We are blessed with nature around us - we have only one negative side: there is aggressor - putin regime - next to our country. But we hope that Russians will get free from putin regime brainwash propaganda and regain their country from corrupt putins elite. We don't hate Russians we hate criminal putin regime. We understand that not all Russians are brainwashed and those who are - are just victims of putin regime propaganda.
Come and visit Latvia!
P.S. Now putin regime trolls are welcome to leave their farts after this comment. They know what their paid for :D
And desperate for foreign investors who will eventually buy every thing not nailed down and asset strip the country. I see you also do not mention the piss poor condition of all public utilities, dwindling population in the counties, an increasing youth unemployment rate and rampant corruption in the public sector.
Poor accuracy in your reporting news boy.
not so desperate to sell out land to China like putin does it
http://www.breitbart.com/national-security/2015/06/21/world-view-russia-...
You say poor conditions? Here is hospital in Sigulda (small town in Latvia) 100% owned by Sigulda city council:
http://www.siguldasslimnica.lv/lv/par-mums/galerija
And here is hospital in Russia, Saint Petersburg:
https://youtu.be/pHBzZisIuGs?t=8m39s
and here is city in russia
http://m.youtube.com/watch?v=OscXu88aSXU
You where talking about poor conditions in public services?
Yes, we have problem with corruption - but not as bad as in Russia. Main problem is in Riga City Council which is run by Nils Usakovs. He has russian nationality and has passed exam to get Latvian citizenship and was elected as mayor (see! No problems with poor russian oppresion!). From there he has run many schemes - latest scheme was from Rigas Satiksme (Rigas public transport company) which had tender to buy chemicals to wash transport but instead it later was found out they bought just plain water in barrels. Yes, corruption under Nils Usakovs is rising. That is in russian genes that come from USSR times. Unfortunately some Latvians also has this infection.
Still corruption in Russia is much much worse under putin regime:
http://www.forbes.com/sites/shelliekarabell/2014/12/22/putins-problems-c...
It's from the top - here is example:
https://news.vice.com/article/russia-awards-lucrative-crimea-bridge-cont...
Will the Burning Building With No Exits meet the wrecking ball or not?
the ruble would work. lol.
fn nazis. there is a better solution.