Tuesday, May 12, 2015

Grexit Delayed, Again

Greece managed to delay their seemingly-inevitable default once again, but the big tests are coming in the next few months.
While Athens once again managed to pull together enough cash to avoid a default, it is not clear how much longer Greece can continue to scrape by.Unless creditors agree to more aid, Greece will have trouble making a series of looming debt payments. The continuing standoff over the aid — and the uncertainty it has created — has darkened the outlook for the country’s economy, which risks another downturn.
The big hurdles, as I mentioned, are still ahead.
The authorized payment to the I.M.F., which is due on Tuesday, is 757 million euros, about $848 million. By mid-July, Greece must pay the I.M.F. nearly €3 billion more and roll over €11 billion of short-term debt. From July through August, Athens must also pay theEuropean Central Bank about €6.7 billion on its Greek bond holdings. 
While the Greeks have done just about everything short of confiscating the piggybanks of the nation's kids, they still refuse to consider what the creditors want – a basic restructuring of the Greek economy, including pensions (which are a problem in more places than just Greece, of course).

Assuming the two sides stick to their positions, it looks like Grexit (Greece dropping the Euro) has to be the final result.


  1. I don't think there's any way the EU will allow a Grexit to happen. Even if they have to bleed the German taxpayer dry to keep Greece in. The EU is an Empire. Once an empire allows one subject nation to leave (or even to partially leave) it's the beginning of the end for that empire.

  2. I'm not so sure, dfor. I think they'd be willing to see them drop the Euro, rather than set a bad example for several other countries. In any case, it will be fun to watch.

    Even more fun will be watching a possible Brexit, since it now seems certain Britain will hold a referendum next year. What happens if England votes to leave the EU, but Scotland votes overwhelmingly to stay in, thus tipping the total vote -- and then Scotland pulls out of the UK? Could be fascinating to watch!