#Grexit Next Month?

I see that with the depressing inevitability of the return of an unloved season, there is renewed speculation (which frankly has never gone away) that Greece will exit the Eurozone possibly as early as next month.

CNBC quote Paul Day, Chief Strategist, at Market Securities:

“It’s a question of when, not if. 

Next month there is the ratification of the ESM [European Stability Mechanism] in Germany and you may well see a situation where Greece leaves the euro, the ESM is ratified and Spain and Italy then go in and ask for the money. 

There is a feeling that time is running out.”

He is of course correct, Greece will exit the Euro. The trouble is no one can know for sure when. As I have noted before, as and when it happens, it will have to take the markets and the citizens of Greece "by surprise".

When Greece leaves the Euro there will be, at the very least, the following "events":

- an imposition of capital and border controls,
- atms will run out of cash
- foreign banks and companies will treat Greece as a "plague ship", and stop all financial dealings in the short-term
- credit cards will not be accepted by many establishments (in fact this is already the case)
- there will be issues of street and civil disorder to contend with
- airports will be full, as foreigners rush to leave

Will Greece leave next month?

I don't know.

However, pressure is mounting; eg Greece is seeking a two year extension to its austerity program.

It is just a matter of time.

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Greece Sacrifices Jobs To Appease The Euro Gods

Greek unemployment has risen to an all time high of 23.1%, from 22.6%.

It is quite clear that Greece cannot remain in the Euro under the present terms and conditions, However, the politicians will continue to sacrifice jobs and people's lives in order to feed their egos and vanity with the continuation of the Euro monolith.

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The Greek Economy Explained

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Don't Believe The ECB Hype

The markets and some commentators are trying to delude themselves that the ECB will finally do something tangible to "save" the Euro.

ECB President, Mario Draghi, has managed to con some people who should know better into believing that the ECB will conduct a major bond purchasing campaign. In theory the bond buying campaign will reduce the interest rates of Spain and Italy (note Greece is not included, because it has been thrown to the wolves) and thus save the Euro.

However, people are ignoring the two very large elephants in the room:

1 Any such decision and action to buy bonds will not occur until after 12 September, when Germany’s top court rules on the ratification of the ESM. This being over a month away means that Spain and Italy, because of crippling interest rates, will most likely have imploded by them.

2 Germany’s top court may well not ratify the ESM. Even if it does, all 17 eurozone members would need to agree to it as well. Fat chance!

Therefore, don't believe the ECB hype.

The Euro, in its present form, is finished!

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The Never Ending Story

Whilst the world sits "agog" watching the Olympics (apart from in India where their power system has crashed), Greece is just about to run out of money again!

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Mario Draghi On Euro Break Up

Mario Draghi, the head of the ECB, has spoken about the possibility of a euro break-up

"When people talk about the fragility of the euro, very often non-euro members underestimate the political capital that has been invested."

Ironically, for once, he was speaking more or less truthfully. In the sense that because so many politicians have a vested interest in maintaining the Euro in its present form, they will fight tooth and nail to keep it.

Sadly, for countries such as Greece, this means that their economies, democracies and social order will be sacrificed to appease the politicains' vanity and egos.

Draghi then reverted to type, and promised that the ECB will "do whatever it takes to preserve the euro".

This of course is patently untrue.

Greece will exit, and the politicians will scramble to preserve the Euro in another form.

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IMF Cuts Greece Adrift

Ahead of this week's visit to Greece by the Troika, the IMF has signalled that it will stop paying further rescue aid to Greece; ie they want Greece to leave the Euro, and have given the Europeans the opportunity to push Greece out if it does not go of its own accord.

Greece is due to make a Euro3.1BN bond payment in August, it is not clear how this can occur though.

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Greece Spiralling Downwards

Costas Mitropoulos, the chief executive of Greece's privatisation agency, resigned on July 19.

 

In an open letter to Finance Minister Yannis Stournaras he notes that the new government has not given him/the agency the support needed:

"In order to accelerate privatization and to carry out the projected result, the government must provide full support for the administration of the Hellenic Republic Asset Development Fund (HRADF), facilitate all actions, and promote privatization as planned. This will give a message of reliability, professionalism and commitment to those looking to invest in Greece. The newly elected government has not given the support needed... 

Instead, they have indirectly yet systematically reduced the prestige and credibility in the eyes of potential investors. 

Furthermore, no set date has been given to the Chairman of the Board to resume meetings and indeed accelerate the privatization program. 

In these conditions I can no longer work professionally and effectively in my role as CEO entrusted by the state in July 2011."

Given that privatisation is key rebuilding the Greek economy and to ensuring that it honours its bailout commitments, the lack of progress indicates that Greece will not meet its commitments and that the economy will continue to spiral downwards.

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#bankersarentus - Bob Diamond's Payoff

Those of you who are following the Barclays soap opera may be gemused to learn that Bob Diamond may have to put up a wee bit of a fight for his £20M-£30M payoff.

The Telegraph reports that the bank's board called a late meeting to review the terms of Bob Diamond's contract and decide the bank's legal position wrt Diamond's £18M of unvested share options and £4M-plus of benefits.

For good measure, Diamond is also due more than £2M in lieu of a year's salary and pension after being thrown out of Barclays by the "Governor's eyebrows".

Despite having earned more than £100M since 2005, Diamond does not appear to intend to forgo any part of his payoff.

Although Diamond had offered to give up his bonus this year, which he had yet to earn, in recognition for the "responsibility" he bore. However, he has not admitted any culpability.

Doubtless everyone in the real world wishes him well in his attempts to extract a payoff!

Feel free to tweet about this using hashtag #bankersarentus

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Greece Will Run Out of Money By Mid July

Source @Pawelmorski

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Greek Government Disintegrates

Having lost its Finance Minister the Greek government, of less than a week, has now lost its Deputy Minister for Shipping (Vernikos) who has resigned this afternoon.

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Greece Names New Finance Minister

With the resignation of Vassilis Rapanos the yet to be sworn in Greek Finance Minister, from his hospital bed on Monday, Greece's new Finance Minister has been named as Yannis Stournaras (the man who led Greece into the Euro using fraudulent data).

It is assumed that he will be able to remain in office at least long enough to be sworn in, before being rushed to hospital.

Above, in case you are wondering, is a photo of the Athens Finance Ministry (courtesy of ZDF).

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Greek Prime Minister In Hospital

The Greek Prime Minister Antonis Samaras has also been admitted to hospital, for surgery on his retina.

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Greek Finance Minister Collapses

Seemingly Greece's new Finance Minister, Vassilis Rapanos, has collapsed and has been taken to hospital.

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Greece Devolves To Emerging Economy

Reuters reports that Greece is now devolving from a first world economy into an emerging economy.

MSCI has placed Greece on review for relegation to emerging market status, this will make it the first country to be thrown back out of developed equity indices.

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Greece Has A Government

Samaras has been sworn in as Greece's new Prime Minister. Greece now has a government, for the time being.

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Euro0.5Trillion EU Exposure To Greece

€ Billion	Total Exposure to Greece
Eurozone:	Austria	15.5
	Belgium	17.7
	Cyprus	1.1
	Estonia	0.7
	Finland	8.5
	France	138.9
	Germany	139.4
	Greece	7.7
	Ireland	7.8
	Italy	84.9
	Luxembourg	1.3
	Malta	0.6
	Netherlands	30.7
	Portugal	19.8
	Slovakia	2.7
	Slovenia	2.3
	Spain	55.7
Non-Eurozone:	Bulgaria	0.2
	Czech Republic	0.3
	Denmark	0.5
	Latvia	0.0
	Lithuania	0.1
	Hungary	0.3
	Poland	0.4
	Romania	0.3
	Sweden	0.9
	United Kingdom	13.5
Total		551.8

Source Zerohedge

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#Grexit

"Now is not the time for any kind of discounts to Greece"
 German deputy government spokesman Georg Streiter.

Source Zerohedge.

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The Dead Cat Bounce of The Greek Election

The markets are currently going through the motions of a dead cat bounce, in response to the results of the Greek election (which did not, at this stage, put Syriza into office).

However, the results show a deeply divided nation (29.7% to New Democracy and 27% to Syriza) which is going to need a third bailout by July if it is to avoid complete financial collapse.

In other words the fundamentals have not changed, and the problems that Greece and the Eurozone face have not gone away!

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Advice For The Oncoming Grexit

It is clear that Greece will leave the Euro, the only uncertainty being when.

Aside from George Osborne publicly stating that Greece may be forced to leave the Eurozone (ie sacrificed) in order to save the Euro, Greek banks have seen a marked increase in the pace of bank withdrawals as the general election nears (combined daily deposit outflows from the major Greek banks have reached 500-800 million euros over the past few days, with the pace picking up as the election draws closer).

Therefore what do you do if you are planning to travel to Greece (on business or for pleasure) in the coming weeks, and are caught up in a Grexit?

My personal advice is to take some spare cash with you in a sock (or equivalent). When Greece leaves the Euro there will be, at the very least, the following "events":

- an imposition of capital and border controls,
- atms will run out of cash
- foreign banks and companies will treat Greece as a "plague ship", and stop all financial dealings in the short-term
- credit cards will not be accepted by many establishments (in fact this is already the case)
- there will be issues of street and civil disorder to contend with
- airports will be full, as foreigners rush to leave

The above "events" are not pleasant to contemplate, but anyone who is planning to go to Greece in the coming weeks needs to be aware of what may happen.

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