Late Tuesday, the Greek PM himself admitted what no one had dared mention in public,with attribution, before: Greece really could wind up leaving the Euro. By the following day it was THE topic in the EU. Below are just a few highlights among many news items.
From Seekingalpha.com’s Global & FX Market Currents (quoted. or paraphrased & summarized)
- Details of Papademos comments: In the full interview, clear the former PM isn’t predicting a euro exit, but warns of nuclear winter in the event of an exit as a way to push Greeks into voting for the establishment parties. Nonetheless, the fact that the Greek PM himself adknowledged the risk that no one else dared mention opened the floodgates
- “46 hours. That’s the amount of time from a Friday NYC close to Monday’s Wellington, NZ open – the amount of time Greece’s (and Europe’s) leaders will have to handle the issues surrounding a Greek exit from EMU. From calming civil unrest to recapitalizing the banks to getting a new currency going, “leaving is messy,” says a former ECB member”
- The ECB has set up a working group to focus on worsening financial conditions due to Greece, reports Die Welt, citing sources. Further market deterioration is likely to instigate new anti-crisis measures from ECB
- Eurogroup Working Group (EWG):Each EZ country must prep contingency plan should Greece leave EMU-It’s a significant step as nothing like this has previously been ordered for fear of leaks. Among the elements to consider are what support the EU/IMF should give.
As of Thursday morning, zerohedge.com has a post claiming that in the German press the “Grexit” is already a done deal.
In the end – most governments of the most widely held currencies are likely to prefer to print money rather than raise taxes, cut benefits, or at least use money printing to minimize the short term pain of voters –at the expense of future inflation & loss of purchasing power. EU already moving that way as France, Italy, Spain & rest of periphery push for Euro bonds (likely to be paid back with printed money as funding nation taxpayers will object to more donations to GIIPS).
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