Has Endgame begun for Greece

The population of Greece is better to think very carefully for whom they want to vote next month. More than half of Greeks voted for anti-bailout parties in elections two weeks ago.

Greece, which adopted the euro on 1 January 2001, is currently subject to the excessive deficit procedure (EDP) as specified in the Stability and Growth Pact. Based on the country’s budgetary performance against the Treaty reference values of 3% of GDP for the general government deficit and 60% of GDP for the government debt, the European Council decided in April 2009 that Greece was in excessive deficit and set the deadline of 2010 to correct the situation.

Since May 2010, the euro-area Member States and the IMF provide financial support to Greece in the context of a sharp deterioration of its financing conditions.

On 2 May 2010, the Eurogroup agreed to provide bilateral loans pooled by the European Commission for a total amount of EUR 80 billion to be disbursed over the period May 2010 through June 2013. The financial assistance agreed by euro-area Member States is part of a joint package, with the IMF financing additional EUR 30 billion under a stand-by arrangement (SBA).

Confidence in the European banking system is crumbling more. Last week, Spanish and Greek authorities both had to deny reports of a run on their banks, but we could see otherwise on the little screen.

In case the Greek want to abandon the euro, would they like to  revert to the drachma and are Europeans going to be prepared to exchange their euros every time they want to go to visit Greece? I do think Greece is going to loose a lot of tourists and the country would be worse off.

To make Greece more competitive and better able to generate export earnings, it would have to be at a rate that would devalue the euros in Greek hands, as well as Greek “assets” denominated in euros that are owned by non-Greeks. The persons having to change their valuable euros shall have to face their quickly going down drachmas. They also shall not be willing to invest in Greek goods, Greek equities or Greek bonds, because any Greek debt would be short-changed. Likewise, if Spain reverts to the peseta, Italy to the lira or Portugal to the escudo.

The European Union has let it go to far and has to be too easy to lend money to Greece and other countries without making sure that they would really do as promised to try to take measures to save and take care of their annual gross income and balance.

Overview of disbursements, EUR billion (as of December 2011)

Tranche Disbursements Euro-area IMF Total
1 May 2010 14.5 5.5 20.0
2 Sept 2010 6.5 2.6 9.1
3 Dec 10 / Jan 11 6.5 2.5 9.0
4 March 2011 10.9 4.1 15.0
5 July 2011 8.7 3.2 11.9
6 December 2011 5.8 2.2 8.0
Total 52.9 20.1 73.0

The second adjustment programme for Greece constituted a unique opportunity for Greece that should not be missed. The Greek authorities should therefore continued demonstrating strong commitment and should have made everything possible to keep up the implementation momentum by rigorously pursuing the adjustment effort in the areas of fiscal consolidation, structural reforms and privatisation, strictly in line with the new programme. I do also believe that could have allowed the Greek economy to return to a sustainable path, which is in the interest of everyone.

Internally Greece had to take care of the corruption, tax evasion and of the bribery which still went on after it became part of the European Union and when the many problems started to bring the country in tight shoes.

Hellenic Economy: Chart of Greek GDP, Total (D...

Hellenic Economy: Chart of Greek GDP, Total (Domestic plus External) Gross Central Government and Total (Public plus Private) Gross External Debt, and General Goverment Deficit, beginning for some timeseries from 1970 and ending for some timeseries in 2010.GDP in International 1990 Geary-Khamis dollars;Debt both as a GDP percentage and in International 1990 Geary-Khamis dollars;Deficit as a GDP percentage. (Photo credit: Wikipedia)

Over the last decade, Greece went on a debt binge that came crashing to an end in late 2009, provoking an economic crisis that has decimated the country’s economy, brought down a government, unleashed increasing social unrest and threatened both Europe’s recovery and the future of the euro. Greece has been kept afloat by its fellow euro zone countries, but at a steep price: the austerity measures demanded by France and Germany in return for two massive bailout packages, have ripped holes in the Greek safety net and plunged the country into a recession of near-Great Depression dimensions.

Greece’s increasingly weak political class should have the will to warn their population and to bring them to their senses to end all forms of anti-social behaviour and that it is high time to carry out new austerity measures, requiring complex legal expertise and cooperation among ministries in a state that lags in administrative capacity, but should be reorganised to be economical sustainable.

In late 2009, the new government of Prime Minister George A. Papandreou announced that it had discovered that its conservative predecessor had falsified budget figures, concealing a swollen debt that was growing rapidly in the wake of the global economic meltdown. Greece was quickly frozen out of the bond markets, and in May 2010 began to rely on an aid package of €110 billion, or $152.6 billion, agreed to by its richer European neighbours.

Greece's recent debt history, between 1999 and...

Greece’s recent debt history, between 1999 and 2010. (Photo credit: Wikipedia)

The price was a series of austerity measures meant to cut the country’s bloated deficit and restore investor confidence. Greece cut the pay of its public workers — a quarter of the work force — by 10 percent — but continued to miss deficit targets as its economy sank deeper into recession, shrinking by an estimated 5.5 percent in 2011.

Throughout 2010 and 2011, investors continued to demand ever higher interest rates for Greek borrowing as the market appeared to conclude that some sort of default was inevitable. Mass demonstrations turned violent in October 2011 as Parliament barely passed additional austerity measures Europe demanded to keep the bailout money flowing.

The economy shrunk by almost 12 percent between 2009 and 2011 and is expected to shrink by up to 6 percent in 2012.

At the beginning of this year 85.8 percent of private creditors holding 177 billion euros in Greek bonds participated in the bond swap and 69 percent of investors holding a category of Greek bonds issued under laws other than Greek law had agreed to the exchange their €20 billion worth, but it still did not bring a solution.

I am not quite sure if the common Greek does understand the danger Syriza could bring the country into. I do understand the poor people are really pushed into the corner and nearly crushed against the wall, but this leftist radical party is not going to bring the solution in long terms. The opposite in short terms is certainly true: demolition. A second default by Greece could undermine banks across the continent that hold its debt. Everywhere people would pull in their money again, for the fear that the drachma would return, which has not become unthinkable now.

Greece’s Socialist government could not push through the tough measures it had promised to reduce its budget deficit and hereby lost all credit by the other Europeans, which look at it with Argus eyes. No wonder that as the fear spread to Portugal and Spain, leaders of Europe’s more affluent countries like Germany and France, worried about lasting damage to the euro, stepped in with a pledge to defend the currency but stopped short of an outright bailout for Greece. to my common sense they reacted to late and were to gullible.

The trust of so many people on the rating offices and they just running behind their ratings, like a donkey behind a carrot on a string, made it even worse for the whole of the European market. the problem for those who did not want to follow the trend was that they (like me) ran behind and had to face more and more, growing losses. For those, needing money at a later time, and having to sell equities, it became a night mare, because their action would bring the problems even closer.

On the Flemish television we could hear Karel De Gucht saying that the European Commission and the European Central Bank are working on an emergency scenario in case Greece has to leave the Euro zone.

“A year and a half ago there maybe was a risk of a domino effect, but today there are in the European Central Bank, as well as in the Commission, services working on emergency scenarios if Greece shouldn’t make it.”

Mr De Gucht added that “A Greek exit does not mean the end of the Euro, as some claim.”

And that is an important signal the European Union has to make to its inhabitants. They should make clear that the domino effect does not come in charge. At all prize we should avoid any form of panic and any signal that could undermine a work of many decennia.

A 17 June victory by the far-left, anti-bailout coalition SYRIZA could increase the possibility of the country leaving the euro, and as expected the prospect of SYRIZA winning the election has sent the Euro and markets across the continent tumbling this week and I am sure will bring the market even more down the coming days.

De Gucht told De Standaard he thought Greece would stay inside the Euro zone, but that the crucial question until the next election was what conditions the ECB would set for guaranteeing the liquidity of Greek banks.

“The endgame has begun, and how it will finish I do not know,” he said. “The question is can everyone maintain their sangfroid over the coming weeks.”

This morning Executive ECB board member Joerg Asmussen has said that the bank’s “preference is that Greece remains in the eurozone. That’s the Plan A, that’s what we’re working on.”

Reverse side of the 500 drachmas coins issued ...

Reverse side of the 500 drachmas coins issued in 2000 (Photo credit: Wikipedia)

Asked whether the central bank also had a “plan B”, Asmussen replied: “There’s already been criticism that there is none. But as soon as you start talking about ‘plan B’ or ‘plan C’ then ‘plan A’ is automatically thrown out of the window.”

Reuters also offered an insight into what Brussels thought of the failed talks.

“Pythagoras didn’t manage to square the circle and God knows these guys don’t know how to either,” said one EU diplomat, echoing widespread sentiment in European capitals.

“The Greeks seem to have no understanding of the seriousness of their predicament and that is a great source of frustration. There’s a breaking point and I think we’re getting close to it.”


Please do find:

  1. De Gucht on Greece: “The endgame has begun”
  2. Europe’s Worst Fear: Spain and Greece Spiral Down Together
    The money available to Europe within its main bailout fund, about €780 billion, or $997 billion, would not be enough to handle the twin calamities of a Greek euro exit and a Spanish banking implosion.
  3. Eurozone crisis: high-stakes gamble as David Cameron warns Greek voters
    A second Greek vote next month backing parties opposed to the European Union’s bailout package would be a decisive vote to leave the euro for which contingency plans have to be made now, David Cameron warned on Sunday in a dramatic raising of the stakes.
  4. Europe Needs a Genuine Financial Union
    What can be done? Greece aside, Spain is now the front line. The market is in broad agreement the Spanish banking system requires an equity injection of between €50 billion to €100 billion ($64 billion to $128 billion).
  5. Europe Can Spend Its Way to Growth
    Europe is back on the right track. With François Hollande as the new French president, we have made a significant step toward growth and the revival of the damaged European economy. Mr. Hollande’s plan to present the June European summit with joint French-German proposals for a growth pact is right, and—in these turbulent times—finally a ray of political hope.
  6. Greek Crisis Poses Unwanted Choices for Western Leaders
    “Anyone who thinks a Greek departure would be cleansing and not cause systemic contagion is deluding themselves,” said Simon Tilford, chief economist at the Center for European Reform in London. “Already we’ve seen a sharp increase in spreads and the beginnings of capital flight in other struggling euro zone economies,” with the risk of a full-blown banking crisis in Spain, where 16 banks and four regions have just been downgraded by Moody’s Investor Service.


  • Should Greece Exit the Euro Zone? Becker (becker-posner-blog.com)
    There is no good solution for Greece, only least bad ones, given Greece’s extensive foreign debt, and lack of competitiveness of its goods in the EU and elsewhere in the world at the present international value of the euro. I have concluded that the better of the two basic dismal alternatives is for Greece to leave the euro zone, and return to the drachma. IMF estimates suggest that Greece needs a devaluation of at least 15-20% against the euro zone average, and much more against Germany just to balance its current account. A greater devaluation would be needed to stabilize its international debt. These are not firm estimates since needed currency adjustments are notoriously difficult to calculate, but there is no doubt that imports will become significantly more expensive to the Greek population.
    If Greece stays in the euro zone, it will go through many additional years of painful adjustment that will mean indefinitely high unemployment and slow, if any, growth in the Greek economy. Over these years Greece’s standard of living- even with the cushion of aid it receives from Germany and the IMF- will continue to fall relative to that of Germany and other countries in the euro zone since its real income will fall further behind incomes in these countries.If Greece leaves, the initial adjustment would be drastic. Greece would have to default on pretty much all its international debt denominated in euros, including loans from the ECB, since the value of the drachma relative to the euro would be too low to enable Greece to repay the debt. Greece would be unlikely to receive further aid from euro zone countries, and certainly Greece will not have access to the international capital market for some years to come. There would be a run on Greek banks as depositors try to get euros and lose confidence in the viability of these banks. Already, many depositors have withdrawn their deposits, as they fear Greece’s exit and a devalued drachma. Greece might be thrown out of the EU itself, which would carry great costs if it happened (I do not think it will). 
  • Euros Not Austerity: Can Greece Have It Both Ways? (wnyc.org)
    Most Greeks want to keep the euro as their currency. Most also want to cancel the eurozone-imposed austerity measures that come with the billions in international bailout loans keeping the country solvent.
    George Davitidis says he’s not scared anymore that the eurozone is going to let Greece default and revert to its old currency, the drachma. It’s too expensive, says the 25-year-old investment adviser.”If the eurozone lets us go, then they will also have to let Spain, Portugal and Italy go,” he says. “There will no longer be a eurozone.”
    The Eurozone Crisis and a Possible Greek Exit 
  • A Greek exit would have huge implications for the Eurozone (torfx.com)
    Anti-austerity Tsipras has vowed to renege on Greece’s austerity agreement: “The popular verdict clearly renders the bailout deal null.” His aggressive stance on the matter has caused many economic analysts to accept that Greece’s Eurozone membership is riding on its last legs.

    1. The Euro was well bid yesterday against the Pound and the US Dollar in the build up to the Greek debt deal
    2. Pound Sterling to Euro Foreign Currency Exchange Rate Forecast – Sterling slips as 2nd Greek bailout agreed


  • The Week’s Outcome: Greece Faces New Elections and Default (02varvara.wordpress.com)
    Many experts have openly called upon the heads of the Eurozone to find the courage to kick Greece out of the Eurozone. Financier Eugene Nadorshin commented, “In the short term, this’d cause additional shock. However, most Eurozone members and financial institutions might find a certain relief in it. In recent years, Greece created a significant amount of complex problems demanding quick solutions, which neither the Greeks nor the Eurozone members were ready to implement. There haven’t been any good decisions taken in the short run, despite the fact that many had taken action based on the best of intentions”.
    If there’s no growth, then, you don’t receive additional tax revenues, and if you don’t have revenue, you can’t reduce the deficit. It turns out that austerity measures lead to an increase in the deficit, rather than reducing it.
    According to the Bank of Greece, depositors removed 700 million Euros (27.98 billion Roubles. 896 million USD. 565 million UK Pounds) from accounts in Greek banks on the first working day of the week. According to experts, the outflow of deposits will only increase… in situations where the banks may simply run out of currency, people prefer to be prudent. Against this backdrop, the Euro fell this week to a four-month low against the dollar, 1.2699 USD per one Euro. Andrei Lusnikov, a leading analyst at Finmarket, warned, “This won’t be the end of it. Nevertheless, firstly, in itself that’s a serious fall, in the last two weeks from the beginning of May, the Euro lost about 5 to 6 percent against the US Dollar.
  • Nightmare foretold if Greece heads for euro exit (ekathimerini.com)
    In Athens, the homeless are on the streets in growing numbers, soup kitchens feed twice as many people as a year ago, and the poor are diving into garbage bins in search of scrap they can sell.Greece is close to breaking point as it struggles with austerity targets set by creditors, but this is just a foretaste of the nightmare of unrest, hunger and even anarchy that could engulf the debt-crippled nation if it is forced out of the euro.
    +A former finance minister, Yiannos Papantoniou, saw trouble ahead nearly a year ago: «Greece would not be able to support 11 million people so there will be huge emigration flows,» he told Reuters Insider television last July. «Disruptions, social disruptions will come. I would say a regime of total anarchy.”

    Last year 23,800 Greeks emigrated to Germany alone, 90 percent more than the previous year, German data show and Greeks are queuing up to learn German.


  • Greek Crisis Poses Hard Choices for Western Leaders (nytimes.com)
    The leaders of the Group of 8, emphasizing growth as well as fiscal discipline at their meeting on Saturday, made a strong plea for Greece to stay in the euro zone and the European Union.
    “Anyone who thinks a Greek departure would be cleansing and not cause systemic contagion is deluding themselves,” said Simon Tilford, chief economist at the Center for European Reform in London. “Already we’ve seen a sharp increase in spreads and the beginnings of capital flight in other struggling euro zone economies,” with the risk of a full-blown banking crisis in Spain, where 16 banks and four regions have just been downgraded by Moody’s Investor Service.
    Even the British prime minister, David Cameron, warned Europe of the urgent need to fix its economic imbalances and structure. Britain is outside the euro zone and has no intention of joining, so Mr. Cameron’s words were resented. But they rang loudly. Europe, he said, “either has to make up, or it is looking at a potential breakup.”
    “A Greek exit should be avoided; it will be very disruptive and disorderly, and not just for the Greeks,” said Nicolas Véron, an economist at Bruegel, a research and policy institute, in Brussels and the Peterson Institute for International Economics in Washington. “It’s a classic clash between moral and economic attitudes. A neighbor may keep starting fires, which is exasperating, but if you know his fire is going to run to your roof you have to act to put it out. Leaders need to make hard calculations about what is best for everyone.”
  • Letters: Finding the funds to bail out Greece (guardian.co.uk)
    The suffering of the Greek people and their understandable alienation from EU policies could be checked by direct aid for health, welfare and employment. Such “gift” funding could be kept separate from the leaky and controversial state budgets, the useless banks and derided state departments, by using NGOs and agencies such as Unicef.
  • We Must Help Greece Not to Leave the Euro (trenhoteleuropa.wordpress.com)
    If the euro is in trouble maybe one option would be for the richests countries to leave the euro instead of the poor ones! As leaving the euro is so hard then the best maybe would be for the riches countries to leave.But this seems to me a bad idea. Do you imagine California leaving the dollar? California also has economic problems but it is obvious that no part of the US is going to live the dollar.
    if the reasons for Greece to leave the euro are so great and no other optin is available (I doubt that) I think that then what could be done is that Greece has two currencies. But in no way, one country that has the euro should be put outside unless it wishes. It is the responsability of the rest of the eurozone to try to do the things in a way that no one wants to leave the euro. 
  • The Endgame: “Greeks feel hopeless” (wrc559.com)
    In their outrage, Greeks voted for every alternative in sight, from the radical left to the Neo-Nazis on the right—in the process clobbering those who’d signed the reform memorandum that the Troika had handed them in exchange for hundreds of billions of bailout euros. Neither New Democracy with 18.9% nor PASOK with 13.2% had the votes to govern.
  • You: Europe on journey to the unknown if Greece exits (france24.com)
    As investors and European leaders big and small tot up the potential cost of Greece departing the euro, the European Union too stands perilously close to meltdown after six decades in the making.Weeks ago still an elephant in the room, Athens’ looming exit from the club of 17 nations sharing the single currency has become the hottest topic in town since Greece’s inconclusive elections this month.
    The endgame could see the euro restricted to a core group of economically sound nations such as Germany, the Netherlands, Belgium, Luxembourg, Finland, Austria and France
  • EU, ECB working on Greece exit contingency (theglobeandmail.com)
    European shares were on course for their steepest weekly decline since November and are now in the red for the year, spooked by the prospect of a Greek euro exit sparking a wave of contagion in the currency bloc which could engulf much larger economies such as Spain’s.
  • Greece must exit (todayonline.com)
    Postponing the exit after the June election with a new government committed to a variant of the same failed policies (recessionary austerity and structural reforms) will not restore growth and competitiveness.Greece is stuck in a vicious cycle of insolvency, lost competitiveness, external deficits and ever-deepening depression.The only way to stop it is to begin an orderly default and exit, coordinated and financed by the European Central Bank (ECB), the European Union and the International Monetary Fund (IMF) – the three organisations collectively known as the Troika – that minimises collateral damage to Greece and the rest of the euro zone.
    Reintroducing the drachma risks exchange-rate depreciation in excess of what is necessary to restore competitiveness, which would be inflationary and impose greater losses on drachmatised external debts.

    To minimise that risk, the Troika reserves currently devoted to the Greek bailout should be used to limit exchange-rate overshooting; capital controls would help, too.
    An orderly euro exit by Greece implies significant economic pain. But watching the slow, disorderly implosion of the Greek economy and society would be much worse.

  • EU, ECB working on Greece exit contingency: trade commissioner (news.yahoo.com)
  • A Romp with Rompuy (economicpolicyjournal.com)
    President of the European Council Herman Van Rompuy : … As regards Greece, I do not hide my concern about the current political uncertainty. Greece is a member of the EU and the Euro zone and this membership implies solidarity and responsibility. The Euro zone has shown considerable solidarity, supplying nearly € 150bn in loans to Greece so far. Alongside this support the EU is developing a huge effort to help reviving the Greek economic potential. We do not question Greece’s sense of responsibility and are hopeful that the next Greek government will act in accordance with the country’s engagement and its European future. Continued reform is the best guarantee for the Greek economy and for a future of the Greek people in the euro area.
  • Nightmare foretold if Greece heads for euro exit (jaldenh.wordpress.com)
    Greece is close to breaking point as it struggles with austerity targets set by creditors, but this is just a foretaste of the nightmare of unrest, hunger and even anarchy that could engulf the debt-crippled nation if it is forced out of the euro.
  • Jim Cramer Is Predicting Bank Runs In Spain And Italy And Financial Anarchy Throughout Europe (theeconomiccollapseblog.com)
    Jim Cramer of CNBC boldly predicted that “financial anarchy” is coming to Europe and that there will be “bank runs” in Spain and Italy in the next few weeks.
    De La Rue (DLAR.L) has drawn up contingency plans to print drachma banknotes should Greece exit the euro and approach the British money printer, an industry source told Reuters on Friday.
    Greece is rapidly beginning to run out of money.  According to a recent Ekathimerini article, the Greek government is likely to run out of money at the end of June.
    Former Italian Prime Minister Romano Prodi recently stated that the “whole house of cards will come down” if Greece leaves the euro.And if the “house of cards” does come down in Europe, that is going to greatly destabilize the global derivatives market.You see, the truth is that the global derivatives market is very delicately balanced.  The assumption most firms make is that things are not going to deviate too much from what is considered “normal”.

    If we do end up seeing “financial anarchy” in Europe, that is going to greatly destabilize the system and we could rapidly have a huge derivatives crisis on our hands.


  • EC and ECB working on emergency plans for Greek euro exit, says trade commissioner Karel De Gucht (telegraph.co.uk)
    Earlier this week, the country’s president said Greeks had withdrawn up to €800m from banks as the political uncertainty deepened.
    In a further blow, the European Central Bank said it had halted liquidity operations with some Greek banks because their capital was too depleted.
  • Will the Euro Zone Go Up in Smoke? (thedailybeast.com)
    Barring a miracle, Greece is hurtling toward a destination that is not even supposed to exist: bankrupt, and outside the euro zone. And if Greece is kicked out the door, the political as well as economic staying power of other debt-plagued members of the euro zone will be tested hard—possibly to destruction.
    Tsipras is putting Greece itself at dauntingly big risk. He may conceivably be right that EU governments are bluffing when they insist that nothing in the Greek bailout deal can be renegotiated. Its current terms doom Greece to an ever deeper depression that will leave the wretched country still more deeply mired in debt. And the trumpeted deal is already unraveling on the markets: the new Greek bonds issued after private investors took a 75 percent haircut a mere two months ago are trading at distress levels already, showing 21 percent yields on 10-year debt. Tweaking the bailout terms could postpone the day of a default that seems inevitable, in the hope that by then the rest of the euro zone would be less vulnerable to contamination.
    Hollande’s election without doubt changes the European political equation—perhaps for the better, if he can really pull France out of the economic doldrums while making good on his somewhat implausible pledge to slice €24 billion from spending in time to cut next year’s budget deficit to 3 percent. But his election will certainly be for the worse if it fuels populist protests against unquestionably necessary reforms to labor markets and closed-shop privileges. His campaign alone may have contributed to the anti-bailout vote in Greece.
  • Endgame in Greece (theatlantic.com)
    Once EU leaders started talking openly about the case for “amicable divorce”–what astonishing irresponsibility that was–the game was up. An incipient bank run gathered pace this week (more slowly than I would have expected, in fact). If that continues, and the ECB withholds unlimited support from the Greek financial system, the banks have to close and the economy will start to shut down. Without external financing, the government won’t be able to pay its workers. Repudiation of debts, chaotic reintroduction of a national currency, and comprehensive economic breakdown will follow–with devastating consequences for Greece and unknowable repercussions for the rest of the euro area.
  • Implement reforms but relax targets (ekathimerini.com)
    “If Greece ends the reform process it has undertaken, then I can’t see that the respective tranches can be paid out,” German Foreign Minister Guido Westerwelle said recently. The communique after the G8 meeting this weekend was along the same lines: “We affirm our interest in Greece remaining in the eurozone while respecting its commitments.”Analysts agree all these comments are aimed at warning Greek voters and political leaders alike that Greece’s eurozone membership will be in danger if voters elect a government next month which does not abide by the terms of the second bailout agreement. To this end, they are indirectly encouraging voters to support the pro-euro parties.+
    By recognizing that the actual budget balance is influenced by government policies as well the temporary ups and downs of the economy, policymakers can take restrictive permanent measures only for the structural component of the deficit and avoid inflicting greater pain on the economy than warranted. Thus they will facilitate the stabilization and recovery of the economy while pursuing fiscal consolidation.
  • numerology for Janez Šušteršič (edpetersonnumerology.com)
    The message the euro zone is sending Greece ahead of its June election is there is a chance it could be forced out of the single currency union and that it could happen quickly if necessary, the finance minister of euro member Slovenia said on Saturday.
  • Are concerns over a Greek Euro exit overdone ? (ritholtz.com)
    The press and the market continues to speculate about the negative impact of an exit of Greece from the Euro (expectations seems to be over 50%) and both the financial consequences of such an exit on the EZ (indeed everyone else) and, in particular, on the adverse contagion issues in respect of the other PIIGS and core EZ countries, for that matter.
    Greeks, by an overwhelming majority (between 75% to 80%) want to remain in the Euro, as they realise that the reintroduction of the Drachma will result in an effective devaluation of at least 50%, by all accounts. The resultant hardship (the need to close the current account deficit to zero immediately) will make the current austerity plans seems like a mild dose of influenza, compared with the pneumonia that will follow an Euro exit. Yes the EZ will be negatively impacted, but the Greeks will make up their minds, based on the likely impact on themselves. This suggests to me that voters will swing away from Syriza and to New Democracy, in particular.
    … Over ensuing months, the new drachma will devalued by about 66% relative to the EURO. Greece real estate and infrastructure will be raped unless land transfer controls are in place. And having no source of bond funds, the Greeks will in the end be forced to even more severe austerity measures than they face today…
  • INTERVIEW-Greek leftist brings message to Europe: “Let’s talk” (vancouverdesi.com)
    In an interview on the eve of his first visit abroad since his surprise rise in a May 6 election, Alexis Tsipras veered occasionally into the combative rhetoric that has seduced disaffected Greek youth and alarmed Brussels and Berlin.But he also stressed repeatedly that he wants negotiations to keep Greece in the euro. He said he was looking to forge ties with likeminded European figures, including new French President Francois Hollande, who want to soften austerity policies by finding new ways to encourage growth.
    +“Greece is a blessed country. It has a lot of sun, it can manage its waters in a better way to produce energy, it has wind. It should become a renewable energy Eldorado,” he said.

    But such suggestions mean changing the European consensus on the need for austerity measures to reduce debt, as manifested by the cutbacks demanded in Greece’s two huge bailout packages, which made its recession worse.


  • Birth of new Greek drachma would be pained, rushed – Moneycontrol.com (moneycontrol.com)
    In principle, some of the long-term consequences of Athens leaving the currency bloc are not unappealing. The euro zone would no longer have to worry about what has always been its weakest link. While a new Greek currency would almost certainly immediately crash in value as soon as it was issued, in doing so it would make the Greek economy much more competitive.
    With life for the Greek people changing overnight with a euro exit, social turmoil would be inevitable. Whoever made the decision – if it were to be made in Athens at all – could certainly not count on being in power weeks or even days later.
    It would most likely be necessary to close borders to stop Greeks smuggling out euros to stash in banks elsewhere. But with hundreds of miles to cover, much of it in inaccessible mountain, wood and scrubland, security forces would be stretched thin.
  • G8 calls for Greece to remain in euro (theglobeandmail.com)
    The leaders of the Group of 8, emphasizing growth as well as fiscal discipline at their meeting on Saturday, made a strong plea for Greece to stay in the euro zone and the European Union.
  • Nightmare foretold if Greece heads for euro exit (dawn.com)
    Greece is close to breaking point as it struggles with austerity targets set by creditors, but this is just a foretaste of the nightmare of unrest, hunger and even anarchy that could engulf the debt-crippled nation if it is forced out of the euro.

    A Greek exit from the euro could cost $1 trillion. — Photo AFP

    If the exact economic impact of such a move is hard to nail down – newly issued drachmas devalued by up to 70 percent, runaway inflation, a banking meltdown, a collapse in trade – the implications for ordinary Greeks crushed by the debt crisis are even harder to predict.

  • Greece ‘needs austerity programs,’ says Schaeuble (ekathimerini.com)
    “European solidarity is not a one-way street … And then structural reforms in Greece are necessary in any case, there’s no more ‘we’ll muddle through as usual’.”
  • German finance minister: Greece ‘needs austerity programs’ (rawstory.com)
  • HSBC’s Greek branches ready for drachma (independent.co.uk)
  • Greek crisis: what happens next? (guardian.co.uk)
  • Should Greece Abandon the Euro? Posner (becker-posner-blog.com)
  • The Endgame: “Greeks feel hopeless” (sgtreport.com)

    Update 21/05/2012 7.30 pm

  • Euro Crisis: How currency devaluation and soaring inflation could actually help Greece if it exits the Eurozone (torfx.com)
    If Greece exits the Eurozone then it will be forced to revert to a new currency. This new currency will most likely come in the form of the new Drachma and will have an initial exchange rate of 1:1 with the Euro. However this rate will not last long as investors will endeavour to price the new Drachma in line with the terrible Greek economy. Subsequently the new Drachma is expected to experience mass devaluation in a short space of time.
    The massively devalued new Drachma should make goods exported from Greece extremely favourable to importers due to the comparatively cheap prices. Tourism, which makes up nearly 20% of the country’s GDP, should also experience a significant boost from the new ultra-low exchange rate. Therefore after a period of desperate contraction and severe economic downturn, Greece should be able to claw its way back towards growth as elevated inflation levels reduce the real value of its debt pile and rapid currency devaluations aid competitiveness in the export and tourism sectors.
  • Is a Greek Exit from the Euro Inevitable? (business.time.com)
    the bank jog in Greece has the potential to become a euro zone–wide bank run. Seeing what’s going on in Greece, depositors in other weak euro-zone economies (Portugal, Spain, Italy) have the same incentive to yank money out of their banks. That could end with the total unraveling of the monetary union. The fears that this theoretical scenario will become realityare increasing in Europe.

  • France presses for euro area bonds to stem crisis (business.financialpost.com)
    “The euro bonds debate is back front and centre and Hollande will have support from other leaders if he raises it,” one EU official said. “It’s not something that’s going to happen overnight — there’s a lot that needs to fall into place first — but there is a desire for a plan of action toward euro bonds.”
  • It is not time for Greece to exit, yet (florincitu.wordpress.com)
    unless 80% of the Greek debt is forgiven financial markets will bring out the weakness in the Greek economy and the euro area design.
    the banking sector, the very same institutions that have been funding Greece even at a rating of “junk”, will have to book more losses. But this would have happened even if Greece will exit the euro zone tomorrow. Banks will have to write off their claim (or most of it) on Greece in either scenario.

About Marcus Ampe

Retired dancer, choreographer, choreologist Founder of the Dance impresario office and archive: Danscontact-Dansarchief plus the Association for Bible scholars, the Lifestyle magazines "Stepping Toes" and "From Guestwriters" and creator of the site "Messiah for all". - Gepensioneerd danser, choreograaf, choreoloog. Stichter van Danscontact-Dansarchief plus van de Vereniging voor Bijbelvorsers, de Lifestyle magazines "Stepping Toes" en "From Guestwriters" en maker van de site "Messiah for all".
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5 Responses to Has Endgame begun for Greece

  1. Vasos Panagiotopoulos says:

    The Leftist elites who have dominated Greek politics for over a century
    shamelessly drove their Trojan Horse into Brusselles and are now
    incredulous theyhave been
    caught. Click
    and read this
    to see how 1893 and 1453 were very similar.


    • marcusampe says:

      Thank you very much for the interesting link.

      Worth also to notice in that article is: “The Byzantine Calendar self-fulfillingly marked 7000 in 1492 with the end of Rome as Armageddon and Byzantium as the millenialist rapture.” and the reamarks on the megalomaniacal public
      works and social policies.

      Would you agree or not with the saying that western civilisation was shaped by the dialectic between Athens philosophy and Jerusalem faith. Athens and Jerusalem matter because they were the dialectic between idealistic Asia and practical Europe?


  2. Greece has been too important for the existence of Europe to let it water it down to a third hand rag shop. All European children should in their school years get to know the Greek culture and visit the land. By going out of the Eurozone not many people would like to have to encounter again all the hassle of exchanging currency just to go for a fortnight to a country were they shall have to face the past glory of a major contingent and have to face all the abominable poverty of the ordinary people, while others have enriched themselves incredibly no matter what it would have cost.


  3. marcusampe says:

    In case “Population transfers are the only humane solution to ethnic strife” and would be the only way out for many Greeks to find again a reasonable way of living, is the North of Europe not going to face an other emigration problem next to the many Eastern Europeans and North Africans crossing the borders?


  4. Pingback: Uncertainty, shame and no time for vacillation | Marcus' s Space

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