The “Grexit”scenarios have been around, alive and kicking already since last December, when the conservative ex PM made them top slogan against the left-wing. #Grexit” script-writers gave it a new boost right after the elections in January and when it became obvious that the new Greek new government had no intention to follow the strict austerity path of the previous governments. No day passes without at least an article favoring “Greece leaving the euro zone” – the polite version- or “Euro zone should kick Greece out” – the rude version-.
But what would it mean for the Greeks if the country exits the euro and attempts to return to the Drachma? “Tragic”, says no other than Goldman Sachs.
“Transitioning from the euro to a new national currency is no straightforward task either for Greece or for Europe,” Goldman said in a note Monday. “Greece can’t just (re)introduce a national currency.”
Grexit “won’t allow the country to write off the debt or convert the liability to drachmas,” the Goldman note says and stresses that “Liabilities would most likely run in arrears that would need to be paid off before Greece could ever tap financial markets,” and thus hindering Greece from been able “to issue a globally traded currency.”
Apart from that the “Greek trade would collapse”, “the government could pay its employees, pensioners and suppliers in drachma, but the currency couldn’t be used to buy imported goods and exporters would want to be paid in a hard currency,” Goldman Sachs warns.
And makes a serious point. That is that”It would be hard to convince even the Greeks to hold any drachmas.”
No to mention the cost for printing own currency…
(full article in CNBC)
What does it mean in reality? No import of essential goods like drugs and fuel, but even less Gyros souvlaki and stuffed wine leafs – or something like that, as I somehow missed the BBC logic:
Video: BBC Grexit
embedded by Embedded Video
YouTube Direkt
Another BBC video explains the euro-exit effect to Greece in a more simple way with soft music and no “souvlaki vs Turkish kebabs” allegories.
Video: BBC
embedded by Embedded Video
YouTube Direkt
British Telegraph “knew” to report on February 28th of the new Greek Drachmas.
“Greece’s new currency designs are ready. The green 50 drachma note features Cornelius Castoriadis, the Marxisant philosopher and sworn enemy of privatisation.
The Nobel poet Odysseus Elytis – voice of Eastward-looking Hellenism – honours the 200 note. The bills rise to 10,000 drachma, a wise precaution lest there is a hyperinflationary shock as Greece breaks out of its debt-deflation trap at high velocity.
The amateur blueprints are a minor sensation in Greek artistic circles. They are only half in jest. (full article Telegraph)
Too stupid that the nice new drachma bank notes are artistic creation by designer Pavlos Vatikiotis presented in 2013.
I assume that apart from capital controls and ATMs spitting out just €50-100 per day, the banks will not be totally closed until the currency transition is over.
Therefore my proposal for the time in-between is a double-faced euro: one side is Euro, other side is Drachma.
PS I remember in 2012, there were people -even from abroad – literally “hearing” the sound of Drachmas as they were been cut out in the National Μint in Athens. As if only Drachma would be only in coins…
There is zero chance for Grexit.
Even if Greece defaults, the default will be within the eurozone.
From a purely strategic point of view only a coordinated and simultaneous exit from the euro by 4-5+ eurozone members makes any sense (in other words has a policy impact to euro-austerity).
Grexit is a toll of terror whose ultimate purpose is compliance. It’s neither executable nor credible other than to those who voluntarily wish to submit to it.
The only real effect of Grexit talk to to continue to drive the euro vs. dollar exchange rate to parity, a move which greatly benefits German exports.
so it is!
Utter nonsense, Dino. Default means no more Euros from anybody, but Greece will still need to pay its monthly expenses. Thus, printing Drachmae will be the only way to keep the state running. It’s as easy as this.
Gray:
You forgot about something called primary surplus which Greece has achieved for both years 2013 and 2014.
A primary surplus means that Greece collects enough to cover its expenses on a annual basis but not enough to cover debt service.
If Greece defaults within the eurozone – which I sincerely hope it does – Greece does not have to service its loans anymore but has enough to go it along.
In fact a default would be the best thing for Greece because it would truly force her to stick to a primary surplus regime in perpetuity as a means of survival.
So I think that Schauble & Co need to accept as a fact a Greek default within the eurozone because such would be the best for Greece and the worst for Germany. As we say “two birds we one stone”.
Weaker euro helps mainly the countries that are battling against huge unemployment figures. But the EUR/USD FX-rates does not fix intra-EMU distortions. I am unable to see any real solution for these imbalances, as having a true fiscal union is not on the cards. Especially Germany opposes such solution adamantly.
I’m afraid that without having a solution for intra-EMU distortions this monetary union will collapse sooner or later. Of course, if other EMU-countries accept “germanisation” of Europe, it will be a totally different story. But according to elections held at January the 25th, at least Greek people doesn’t want to be “germanised”.
We are at dead end at the moment.
It would be totally ok with us if Greece became like Switzerland, Finland or Denmark instead. We like to be unique, we’re not enthusiastic about copycats!
🙂
Anyway, imho nobody can reasonably blame us for our lack of confidence in Greek governments! who have made great promises all the time, but didn’t really change the country for the better so far. If Greece doesn’t want to modernize ok, but then that country can’t expect others to subsidize its backward ways!
I think you may want to brush up on some video viewing. The geopolitical answer is that the entire world is now aware of Europe’s German Problem which has existed continuously since 1871 and this time the world has the determination to solve it once and for all.
BTW, there is no more eurozone. Only a silly convention that such exists just to kill time:
http://www.c-span.org/video/?324041-1/book-discussion-flashpoints
1871? Don’t be ridiculous. What’s got this to do with Greece? Nothing. You really need to get a more reasonable historical perspective. We Germans don’t blame the French or the Swedes anymore for their horrible imperialism of the past, neither. How would you feel about, say, the Syrians complaining about Alexander the Great?
Alexander just passed through Syria, a province of the Persian Empire. So the Syrians have nothing to say or feel about Alexander or his successors.
One thing you have to understand about Greece is that we are the anti-empire peoples. We are free citizens, using the collective wisdom called democracy, to defend what is sacred and dear to us – namely freedom.
You on the other hand, the Germans are all about empires and as such by definition the anti_Greek people. You even call yourselves Aryans, meaning Persians who are the precise people we have thought to be our mortal enemies for thousands of years and fought against since antiquity.
What does this all have to do with modern times? Simple: we can not live under the same roof. We want a divorce and we want it now.
“Just passed through” is a daring understatement of the destruction, imho. And your claim about alleged German imperialism now, in the 21st century, is delusional.
But, hey, i’m all for a divorce, too, so there won’t be any reason for argments in the future!
🙂
Yes, but divorce means you leave the eurozone and let the remaining 18 members figure it out.
Our of curiosity Gray:
You had a perfectly cooperative government in Samaras & Co and it seems that you dropped the ball by failing to support it.
Why such colossal failure in German planning and engineering?
And now you expect the most uncooperative and amateurish Greek government to actually achieve what your ND+PASOK professionals couldn’t?
How desperate things really are in Berlin, pray tell?
“Perfectly cooperative government”? Samaras and his gang of lamers? Who do you want to fool, Dino?
Gray:
You had both ND+PASOK spreading the Berlin Gospel 24/7 for 2 years non-stop. And you couldn’t support your own collaborators?
What does this say to Syriza? That Berlin is trustworthy so we better cooperate with them ASAP?
Seriously now “frenemy”: How could Berlin blow this one up? What were you thinking? Is this a sample of German leadership? Abandon your own allies and seek from you enemy that which your friends couldn’t give you?
Berlin has nominated easy-going, nothing-to-report, lets’-sit-and-talk To Potami as Greeks’ next government LOL
The problem with Potami is that it has already adopted the Berlin line.
As such it can not negotiate.
yes man!
Samaras was rather a disappointment regarding reforms. And the numbers show how he lost trak in 2014, pushing the economy back into stagnation. He lost the election because of his own lack of achievements. And after all the criticism in 2012, Merkel & Co did take great care not to influence the vote.
Now, as I wrote in comments, the more reform minded stance of Syriza did look like positive change, until the first days in government showed their extremism. A chance wasted. Probably the last chance for Greece to stay in the Euro.
But Samaras + Venizelos was 100% pro-German and the best you could get.
If you didn’t manage to get your program passed through them then it’s time for a German retreat.
I’m all for retreat! After five years of almost no progress at all, it’s obvious that Greeks don’t care about reforms. So, let’s end this charade. No more money for that hopeless country, period.
o.k. if you think tactics like this will win the argument for Germany on the world stage I am all for it too.
You see, we already know what brutality means; we don’t need to be reminded that you invented it.
Dear Gray,
I am Finn (but living now in Greece) and I see the catastrophe unleashed in Finland’s economy because of the common currency. Finland faced the same dead-end in 1991-92. The solution was to break free from this ERM (the ancestor of the Euro) and recovery began.
And yes, I hope that this new Greek government is tackling with the issues of corruption, tax evasion etc. I think it would be Germany’s (and other creditor countries’) will, as well. But instead of encouraging mr. Schäuble yells that “elections change nothing!”
So, who is against the change, or “modernisation” as you put it?
Since you live in Greece, you must be aware that it’s all promises but no action yet. Just like the previous governments. Way too many lofy annoncements have been made in rhe past, and rhat’s why Schäuble rightly insists that only enacted and implemented reforms will lead to any further support. Apart from that, he also, correctly, expects fiscal responsibility. No big spending that increases the deficits! So, there may be hope that Syriza runs a better government, but no evidence yet. Modernization would be great, but after rhe bad experiences of the last years, we Germans will only believe in it when we see it happening!
Gray:
It’s far simpler than you think. All Syriza is asking (for ideological and base support purposes) is to lower the arbitrary 4.5% of GDP for primary surpluses down to 1.5% so that these new fellows could do some public spending and humanitarian shore ups.
The rest is nonsense. You never modernized Greece, you never have offered any assistance in making Greece efficient nor have you ever sought to improve the finances of Greece.
The only thing you sought is to keep the subsidized euro currency alive plus the trade area of the eurozone + rest of EU because more than 50% of your trade depends on such.
It’s kind of very insulting to pretend that you care about Greece when all you do is care about the preservation of an unholy system to which you have grown a peculiar and deadly addiction.
FIRST Greece has to delivers reforms, THEN it can negotiate about a better deal.
Gray:
Forget about Greece. What you have here is a Syriza government which the polar opposite of Berlin.
To say Greece must deliver reforms, who are you addressing to?
Pick it up with Syriza. What do you expect the rest of us Greeks to do? Have elections every 2 months because you think we should reform?
Can’t you see how ridiculous Berlin’s position is? Why’s do you have the intellectual honesty to own Syriza? It’s your own creation.
I cannot disagree with Henri Myllyniemi – “I’m afraid that without having a solution for intra-EMU distortions this monetary union will collapse sooner or later.”
But in the short run it starts to look positive – there are forecasts of 1,5 to 1,9 % GDP growth for euro area, if it happens , it will diminish the problem for some time. So the probable answer is: later , not sooner – these forecasts look realistic.
We still do not know what will happen with Greece. Mr Tsipras is good at negotiations, but investors seem not to be very enchanted.
guys, don’t put such difficult questions to @Gray, we will lose him as ‘commentator”
Thx for the concern, kt! No worries, Dino’s trolling won’t chase me away. After all, I do like you, even though your fuzzy political stance confuses me.
🙂
erstmal die Fragen schoen beantworten und dann die “Witze”
Ja, Männo, äh, Frauo, ich bin doch schon dabei! Alter Mann ist doch kein D-Zug.
Fertig! Viel schneller als ein Griechischer Beamter es erledigt hätte. Und überhaupt, was sollte denn der Druck, hast du dir das in Deutschland angewöhnt, kt?
😛
bist du krypto bild-leser? gleiche rhetoriki mit bild …
You like her and not me? How come? What have I done? 🙂
LOL no jealousy scenes & drama here , pls!
LOL!
It’s just something about his 50 shades I guess 🙂
yeap…
Shades of Gray, not Grey!
🙂
Oh…this clears it. A common Greek-German misunderstanding I guess.
Just like Syriza is an alternative word for Greek Nein.
Right. A bit of jealousy is salt in the soup, but too much ruins it!
🙂
You’re male, Dino! Sorry. Apart from that, we don’t really get along with each other, let’s be realistic about that.
🙂
I don’t dislike you as a person.
What I don’t understand is your reasoning.
You want us to do something about a government that your policies created.
What do you want us to do? Cause new elections? Then Syriza will come in with 45% of the vote and 200+ Parliament seats. And then what?
hahaha! i had this chat with him a while ago. “and the machine spitted Potami” BTW: EP presid Martin Schulz (SPD) was so impertinent to say this openly while in Athens a week after elections.
Sure. Schultz considers Potami another left center party akin to his Social Democrats. So his preference is understandable.
What is not understandable is how a 6% party like Potami could ever lead a Greek government? You need a 30%+ vote for such.
If Schultz’s argument was to replace Independent Greeks with Potami, such would have been a Trojan Horse move. It would have rendered the coalition government unable to internally agree and as such ineffective.
What Schultz and other eurocrats don’t understand is that the more EU is vocal about its political preferences for Greece, the more the notion that the EU makes its citizens less democratic, poorer and less free becomes an undisputed proposition.
We Germans are not really interested in who governs Greece. Just [KTG AMin intervention here! ] and we’re fine.
Gray:
That’s what Schauble says but apparently you are very much interested in who governs Greece because otherwise you render yourselves politically irrelevant and therefore expose to others the notion that German domination of the EU is a myth.
If you are not interested of who governs Greece then why can’t you stop being obsessed with Greece?
I will tell you why. Because Greece will be remembered in history as the place where Germany lost its marbles.