Coming - GREXIT (Greek existing the Eurozone)

Greece rejects extension of bailout under terms offered by eurozone finance ministers


Negotiations over how to keep Greece afloat broke down abruptly Monday, demonstrating a wide gulf between Athens and its European creditors and triggering a new, heightened state of uncertainty about the country’s future inside the currency bloc. The collapse in talks among eurozone finance ministers leaves Greece and its lenders racing to reach a new financing deal for the indebted country before its existing bailout plan expires. The ministers called off the negotiating session just a few hours after it began, saying Greece left them little hope of securing an agreement. The ministers, in turn, presented the new left-wing government in Athens with an ultimatum: Agree to an extension of the current €240 billion ($272 billion) bailout by the end of the week or lose the lifeline of rescue loans that have sustained Greece for nearly five years. Greek Prime Minister Alexis Tsipras and his finance minister, Yanis Varoufakis, oppose the terms of the rescue deal from the eurozone and the International Monetary Fund, saying they are hurting its economy and society. “It’s not a bluff, because it’s the only option we have,” Mr. Varoufakis said of his government’s position after the meeting. “It’s plan A, there is no plan B.” If the bailout ends as scheduled on February 28, the Greek government will lose access to the last €7.2 billion slice of its current bailout, potentially leaving it unable to make debt repayments looming in March. That could, in the worst case, trigger a series of events that would force Greece out of the eurozone.
Comment: The Eurozone would be better off without Greece. But the West is concerned Greece will align with Putin. But Greece's finances would be a drag on the Russian economy. Image source.
This article is 5 years old but probably about accurate: Greece's economy is same size as Dallas-Fort Worth's


  1. Another size article: Did You Know Greece's Economy is Smaller Than Michigan's?

    My view: Let 'em go ... let 'em suffer the consequences.

  2. A great film about Greek recent political history ... the 1969 Z. "The film presents a thinly fictionalized account of the events surrounding the assassination of democratic Greek politician Grigoris Lambrakis in 1963"

  3. Greek debt talks implode:

    Syriza is not fighting for the "average European." If they were, they'd pay the average European back what they owe them. In 2012, most Greek debt was converted to EU government bonds, putting taxpayers in Germany, France, and other countries on the hook if Greece can't repay their debt.

  4. What would happen if Greece quits the euro?:

    Unable to borrow from anyone (not even other European governments), the Greek government would simply run out of euros.

    It would have to pay social benefits and civil servants' wages in IOUs (if it pays them at all) until a new non-euro currency can be introduced.

    The government would not be able to repay its debts, which now amount to a total of about €320bn (£237bn), most of it owed to European governments and agencies and the International Monetary Fund.

    The government would have to impose a freeze on withdrawals and on people taking money out of the country. This could lead to queues of ordinary Greeks trying to empty their bank accounts before they get converted into a new currency worth substantially less than the previous one.

    In the longer run, Greece's economy should benefit from having a much more competitive exchange rate.

    But the devaluation would not solve underlying problems in the economy, including poor tax collection and a struggle to control government spending.

    There is also a real possibility of a surge in inflation.

    Tax receipts would probably fall as the economy contracted, so the government might finance spending by printing money.

    The likely currency depreciation would also be inflationary. It would make imported goods - which in Greece includes a lot of its food and medicine - more expensive.

  5. Let them go if they want--and let the bankers who lent them the money suffer. They had to know it was a bad credit risk.

  6. El-Erian: Worst-case scenario may spark correction:

    On one side of the standoff, Greece sees the euro zone as a house of cards, in which a Greek exit would bring down the rest. Germany, on the other, considers the 19 single currency nations as climbers held together by a rope, with Greece as a weak link that may need to be cut loose.

    El-Erian said the truth lies somewhere in the middle if not "more to the 'climbers' characterization than the 'house of cards,' ... [but] not decisive enough to make one side feel that strong."

  7. The Case for Letting Greece Go - The risk now is political contagion from rewarding non-reform.:

    .... sooner or later Prime Minister Alexis Tsipras and his government will miss a payment to someone if it doesn’t agree with creditors on a new bailout. An exit from the euro would then be a real possibility.

    No one should cheer a Greek exit, which would be a disaster for the Greeks. But if Athens won’t implement reforms that would return Greece to growth and sustainable finances, allowing the country to leave would be the least bad outcome.

  8. Greek banks ‘close to collapse’ as debt soars:

    Greek debt costs leapt yesterday as the French central bank warned that the banking sector in Athens is on the verge of collapse. The euro fell 0.6 per cent to $1.074 after International Monetary Fund and G20 meetings in Washington held out little progress on the prospect of Greece satisfying creditors to unlock €7.2 billion in financial aid by the end of the month

  9. It’s time to stop worrying about Greece defaulting:

    A Greek default would deepen the misery ordinary Greeks are enduring. But default wouldn’t necessarily force Greece to leave the euro zone and go back to its old currency, the drachma. Many press reports, in fact, treat default and a eurozone exit as synonymous. They’re not.

    The script would probably go something like this: First, Greece would have to decide whom not to pay: vendors who supply the government, workers and pensioners who get checks from Athens, or creditors that loaned Greece money and are due a routine debt payment. Keeping faith with creditors is vital, but Tsipras ran a populist campaign premised on freeing ordinary Greeks from the tyranny of faraway bankers. Choosing creditors over pensioners at crunch time would violate Tsipras’s campaign promises and cut into his already shaky support. So creditors may get the shaft first.

    If Greece fails to make a debt payment, it will enter default and trigger a predictable series of events. Bank depositors would try to withdraw money en masse, forcing the government to declare bank holidays and put limits on withdrawals. Since no economy can function amid bank runs and capital flight, the Greek economy would plunge into recession and possibly depression. Output could easily drop by 10% or more. Hyperinflation might ensue.

    In the aftermath of default, Greece would be shut off from any further funding from the IMF, the European Central Bank or other such authorities. That’s why Greece, in theory, would have to exit the eurozone: It would have to start printing its own currency. But something else is much more likely to happen: The Syriza-led government would collapse, forcing the election of a new coalition. And a new government would probably be more willing to accept bailout conditions, returning Greece to the status quo and solidifying its place in the eurozone.

  10. IMF: Greece to miss Friday's scheduled payment:

    Greek officials said Thursday the debt-plagued country won't make a 300 million euro loan repayment due Friday, and instead will bundle four scheduled paybacks this month into one by June 30, the International Monetary Fund said Thursday.

    Greece owes its creditors -- the IMF, the European Central Bank and the European Commission – a total of about 1.6 billion euros by the end of the month.

    Under a rule adopted in the late 1970s, member countries can ask to roll together separate payments due in the same month "to address the administrative difficulty of making multiple payments in a short period," the IMF said.

    What do you think will happen on June 30th?


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