Suppose there is no deal reached by June 5th between Greece and its creditors, suppose that no bailout money arrives in Athens, suppose the Greek government and the Greek Finance Minister do not transfer the money to the International Monetary Fund on June 5th. What will happen? The IMF will theoretically a month to declare Greece’s official default and with whatever the cost and impact for the debt-ridden country.Greeks will be holding their breaths, life will stand still.
But how about Greece international creditors? The blow to International Monetary Fund, the European Central Bank and the European Union will be immense. Their much criticized wrong austerity recipes will be not only exposed but officially sealed. No matter how much they will try to cover their failure through international media propaganda, their credibility will be over the board.
And our beloved “common currency, the Euro” will not only sink to the bottom but its credibility too will be lost and hard to recover.
In her FORBES-article “Greece, The
EU And The IMF Are Dancing With Death” Frances Coppola stresses among others:
“Greece stands as close as possible to the cliff edge and dares the other players to push it over, knowing that it is not in their interests to do so. It has played this hand extraordinarily well so far, managing to avoid a catastrophic default while steadfastly refusing to cooperate with the EU or – until now – the IMF.
But the IMF has now joined Greece on the cliff edge. The challenge to the EU has changed from Greece’s “Go on, push me” to “Sort this out or we’ll let go” from the IMF.
The ECB must be spitting blood. It has been trying the same strategy for months – hence the “asphyxiation” of Greek banks about which Greek finance minister Yanis Varoufakis complains. But the ECB has too much to lose. If Greece falls over the edge, there is a serious risk that it will take the Euro down with it – and that means the end for the ECB. The IMF can credibly play this strategy. The ECB cannot.
The European Commission’s position is equally difficult. For the present incumbents, allowing Greece to default and leave the Euro would threaten their own positions. It would, at the very least, be a mammoth policy failure, even if it didn’t fracture the Euro beyond repair.” (full article FORBES)
So let them do it. Let them accept Greece’s challenge and let it default without agreement and with no bailout funding. Let them do it. Let them pretend, they wouldn’t care.