In a new Deutsche Bank report on Greece, one infographic perfectly captures the tortuous road ahead in order to avoid a Greek exit from the eurozone, or Grexit.
To begin with, the four-month bailout extension that was agreed to on Friday, could still fall apart if Athens’ promised list of reforms — which we still haven’t seen — is not accepted by Europe’s finance ministers, known as the Eurogroup.
The chart below outlines the four other challenges before a new agreement is made.
Some of the steps clash against each other. The Greek government could easily get the Eurogroup to agree to their extension if they give up their party’s totemic anti-austerity policies. But if they do that, they will find it hard or impossible to get it past their own MPs.
It’s worth remembering that this is all just the weigh-in. Greece needs a loan to cover itself for the real negotiation period, which is still to come. If this were an epic trilogy, we’d still be in the first 40 minutes of the first film.
There are hundreds of ways that the government could be tripped up during that second negotiation process, and Greece could go back to market chaos.
DB’s analysts say that Greece’s voters “sent a clear anti-austerity, pro-euro message,” with more than 50% of voters going for anti-austerity candidates, and more than 80% going for pro-euro candidates.
During the next few months, we’re going to find out whether the new radical government can have its cake and eat it too.
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