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Now that the consensus seemingly is one that a Greek exit is inevitable, there was only one missing step: an actual New Drachma currency, not in When Issued, electronic 1s and 0s format, but real, based on cotton and linen. It appears UK banknote printer De La Rue is now on top of that. From Reuters: "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. The news comes as EU trade commissioner Karel De Gucht said on Friday the European Commission and the European Central Bank are working on an emergency scenario in case Greece has to leave the euro zone - the first time an EU official has confirmed the existence of contingency plans." Now as noted earlier, the "emergency scenario" was promptly denied by the EC, but as of now nobody has denied the drachma printing yet ...
....one blindingly obvious thing, that everyone seems to overlook is, that Greece has an option to default, WITHOUT leaving the Eurozone.
...but what would be the difference if they exit the Eurozone? They are bankrupt, completely and finally. The default is the only real option, mid-long term. If they exit Eurozone, they are exactly as bankrupt as they are, without exiting it. With all the same consequences to the creditors (ze Germans including, they are in a very peculiar position, with their exports depending on the size of Eurozone, and also weak Euro - they are not that much interested in local, strong currency, as one might think - their economy lives and dies by their exports.Dont agree Bushi
ok theoretically they can but then everyone except germany and a couple of minor players, defaults too. even the big german banks default.
So for Greece to default and stay in the eurozone we are contemplating a giant reset ..............
Yes probably, but it doesn't really matters. My point is, they can be skinned equally well, within or out of Eurozone, they are still on the same hook, if not default. Even if they exit, and devalue drahma, to revive experts/economy, their debts are denominated in Euros, so they won't print their way out - opposite, their debt, measured in drahmas, would go up as much, as they devalue - so from their point of view - out would go up.bushi said - ...but what would be the difference if they exit the Eurozone?
the difference is that in order to show the rest that they should not default, Greece is the sacrificial lamb.
..Greek political leaders reacted angrily on Saturday to a suggestion, attributed to German Chancellor Angela Merkel, that the country hold a referendum on euro membership alongside an election next month.
The chancellor's move -- despite a denial by Berlin -- went down badly with leaders sensitive to any comments from Germany, which has insisted that Athens stick to tough austerity measures agreed in return for a massive EU-IMF bailout.
"The Greek people have no need for a referendum to demonstrate their choice for the euro, they have already made enough costly sacrifices to show that," said Antonis Samaras, leader of the conservative New Democracy party which won inconclusive May 6 polls.
Merkel's suggestion, "above all coming in the run-up to the election, is regrettable and unacceptable," Samaras said in a statement. "The Greek people has the right to respect from its (European) partners."
The office of the caretaker prime minister said on Friday that Merkel "conveyed thoughts (to the president) on holding a referendum alongside the election, on the question of whether Greek citizens wish to remain in the eurozone."
The suggestion was turned down, a statement said, because the caretaker government only has the authority to organise the new polls, expected June 17.
Berlin bluntly denied any such move.
"The information reported that the chancellor had suggested a referendum to the Greek President Carolos Papoulias is wrong," a Merkel spokeswoman said.
Alexis Tsipras, leader of the radical left Syriza party which came second in the May 6 vote on a campaign against the austerity policies, alluded to Germany's wartime record in Greece, a hugely sensitive and controversial period.
"Madame Merkel is used to talking to Greek political leaders as if she was addressing a protectorate," Tsipras said.
"Greeks are going to give a definitive answer (in the upcoming polls) and are going to put an end to the policies of austerity and submission, they will open the way for progressive forces across Europe," he added.
The leader of the socialist Pasok party, which along with New Democracy backed the EU-IMF accord and suffered accordingly on May 6, said only the Greek parliament and government had the authority to call a referendum.
"The question for Greece is not whether it stays in the euro or not, but whether it can get out of the crisis," Evangelos Venizelos said.
Greek newspapers were even more critical -- "Merkel Ultimatum," was the pro-Socialist Ta Nea front page headline.
"It's a Merkel Bomb for a euro referendum, an unprecedented political intervention which makes things worse," wrote Eleftheros Typos on the right, while financial daily Naftemporiki also spoke of a "political bomb."
The Merkel imbroglio comes at a bad time, with the chancellor in Washington for G8 talks hosted by US President Barack Obama who has shown himself more sympathetic to the need for growth than austerity as Greece tops the agenda.
Obama said Friday he supported Greece staying in the eurozone, a region of "extraordinary importance" not only for Europe but also for the global economy.
Up to now, Merkel has insisted that Greece must stick to the austerity terms in the bailout deal or risk losing access to debt funding -- effectively forcing it out of the eurozone.
But in recent months, calls for the focus to be rebalanced towards growth have increased, with new French President Francois Hollande winning office earlier this month on a pledge for change.
Despite the brickbats, it is also clear that in effect the June 17 polls are fast becoming a straight vote on Greek acceptance of the bailout deal and its continued place in the eurozone.
After recent polls put Syriza in the lead, a survey Friday showed the race narrowing, giving New Democracy 23.1 percent of the vote, up from the 18.85 percent it won on May 6, with Syriza on 21 percent, up from 16.8 percent.
Fears that the new poll might not be able to produce a viable government committed to the bailout have roiled global markets and snared Spain where the government is struggling to stabilise its stricken banking system.
"Time is clearly running out," London-based analysts Capital Economics warned in a note over Greece's continued political paralysis.
"If the government does not meet the conditions required to receive the next tranche of the bailout, it could run out of money before the end of the summer."
...it is possible to be within European Union, but outside monetary union (Eurozone) - examples: UK, Norway, Poland (and most of the recently joined members like Eastern European countries).(...)If Greece leaves the Euro but stays in the union, if that is even possible,it will be like spitting in Germany's eye and getting away with it. (...)
Greek stock markets rebounded strongly on Monday from a 22-year low on hopes a pro-bailout party will win crucial national elections next month, which would avoid a catastrophic rift with international creditors and keep the struggling country within the euro currency union.
The main stock index in Athens soared to close up 6.9 percent, with the battered bank sector chalking up solid gains.
Four polls published Sunday reversed previous trends to indicate that conservative New Democracy could come first in the June 17 vote, slightly ahead of the anti-austerity radical left Syriza party. Although the conservatives would still fall short of a governing majority, the surveys suggested they could form a coalition government with socialist PASOK, which have also pledged to stick to Greece's austerity commitments.
The debt-crippled country is being kept afloat by huge international rescue loans, granted on condition of harsh cutbacks and reforms that slashed living standards. The austerity, however, also caused huge popular resentment toward New Democracy and PASOK, the two parties that accepted the terms. Voters expressed that anger clearly in May 6 elections, giving a boost to anti-bailout parties. But the election proved inconclusive, with none of the parties able to form a coalition government, leaving Greece to hold another ballot next month.
Greece's bailout creditors — the other countries in the 17-nation eurozone and the International Monetary Fund — insist that if the country reneges on its austerity commitments, the rescue loans will stop.
...
Behind the scenes at the G-8 and NATO summit meetings, some significant decisions were made that will impact over the coming weeks.
The critical decision at the G-8 meeting and several of the bilateral meetings that took place on the sidelines of the Camp David gathering centered on the decision to plunge ahead with the bailout of the European banks in an effort to save the Euro system, with Greece still inside. President Obama is terrified that a financial meltdown of the Euro system will spill over into Wall Street and result in his losing the November elections. Behind the scenes around Camp David, Christine Legarde put the IMF squarely behind a bailout of the European banks, with the full backing of the Federal Reserve and Treasury in the United States to boost the leveraged lending of the European Central Bank (ECB) to prop up the European banks. ECB will take junk bonds and other vastly over-priced assets as collateral for loans to the Spanish, Greek and other European banks. This will offset an additional estimated $500 billion in new write-offs by bondholders of Greek debt.
The bottom line is that if Greece leaves the Euro, the contagion will spread overnight to Spain, Portugal, Ireland, and, perhaps, even Italy. So, the IMF, the Obama Administration and the ECB are all on board to further delay the reality of the financial and banking crisis through hyperinflationary measures. The idea is that the situation will take many months to fully play out, and Obama and his re-election team hope that the system will hold together past the November elections.
In his sideline meeting with new French President Hollande, Obama reached a full agreement on this perpetuation of the Euro. This is an area where Hollande and Merkel will agree to disagree. They both want to defend the Euro, but Hollande will continue to insist that the austerity must be limited and a growth program initiated. This is actually impossible to accomplish, but this is the growing perspective of the Eurosocialists, including Hollande and his colleagues in Germany’s Social Democratic Party (SPD) and the Italian Socialist Party (PSI). A majority of Greek voters are in favor of staying in the Euro, so long as the austerity is reduced.
Hollande will make another effort this week at the European Monetary Union heads of state meeting to push for Eurobonds, as one way to implement this bailout plan. Merkel will likely oppose and block this latest Eurobond argument. The total amount of assets on the books of the US Federal Reserve and the European Central Bank fall far short of the currently estimated 4 trillion euro liability of the European private banks.
This was the single-most important decision taken at the G-8 meeting, and it was a deeply flawed decision that will have severe consequences. For Obama, the crucial question is: Will the consequences hit before or after the November elections in the United States? This may be the deciding factor in the outcome of those elections.
...
I was on the road last week attending a conference for my day job, so I missed some of the news I would normally highlight here. This is interesting enough to highlight even though it's a few days old:
More: http://www.jsmineset.com/2012/05/27/behind-the-scenes-with-harry-schultz/
I agree with Rblong. If Greece exits, there will be a cascade of CDS redemptions, and all other risky sovereigns will require more collateral on CDS, and on and on and on. Ebentually, the whole thing comes down in a smoking heap of worldwide destruction. The only thing that can stop it is if all CDS were to be declared null and void immediately and declared illegal as well.
I'm not sure how quite they will be able to keep it, because after all, they are supposed to be instruments of protection; insurance policies.
If someone arbitrarily abrogated a contract in to which I entered with a third party, I would be murderously angry. Imagine how angry all those people holding swaps on nearly a trillion in cumulative debt will be. That's a lot of cabbage man. I rather believe they won't just go quietly in to the night.
I have been assuming the swaps will be declared null and void when Greece defaults. It may be through law changes or forced haircuts, but it will be done quietly.
Great! lol. Now what?
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