{"id":9841,"date":"2015-07-09T06:22:34","date_gmt":"2015-07-09T11:22:34","guid":{"rendered":"http:\/\/olduvai.ca\/?p=9841"},"modified":"2015-07-09T06:22:54","modified_gmt":"2015-07-09T11:22:54","slug":"why-grexit-is-the-most-likely-outcome","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=9841","title":{"rendered":"Why Grexit is the most likely outcome"},"content":{"rendered":"
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Why Grexit is the most likely outcome<\/a><\/h3>\n
Ahead of Greece\u2019s referendum on a bailout plan in early July, EU decision makers, including Eurogroup Chairman Jeroen Dijsselbloem, warned a \u201cno\u201d vote might lead to Greece\u2019s exit from the Euro. After Greece\u2019s overwhelming \u201cno\u201d, and Eurozone leaders\u2019 latest ultimatums, there are a number of factors that indicate that \u201cGrexit\u201d may indeed be the most likely outcome.<\/div>\n<\/div>\n
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1. Greece is already in default to the IMF<\/strong><\/p>\n

Last week, Greece defaulted on its obligations to the IMF, even if we technically would need to say it was put in\u201carrears\u201d<\/a>. Greece is the first developed country to do so. Currently, the Greek banking system is dependent on the ECB allowing the Greek Central Bank to issue loans to Greek banks through a scheme called\u00a0Emergency Liquidity Assistance (ELA)<\/a>. As the name suggests, this funding can only be provided to deal with liquidity problems, so it cannot prop up insolvent banks. Greek banks are intimately\u00a0linked<\/a>\u00a0with the insolvent Greek state, meaning they are insolvent themselves, meaning in turn that the ECB would need to cut off funding.<\/p>\n

The necessary two thirds majority\u00a0needed<\/a>\u00a0within the ECB Governing Council to block the Greek Central Bank from creating euros to lend to Greek banks under ELA hasn\u2019t been reached so far. As a result, the ECB has had to come up with all kinds of excuses, the latest being that it will only cut off ELA funding for Greek banks in case there is \u201cno prospect of a deal<\/a>\u201d. The ECB\u2019s excuses are likely to run out soon, especially if the Greek government defaults on payments to the ECB on 20 July. This week, the\u00a0ECB restrained ELA<\/a>\u00a0a little more, but it\u2019s expected to provide ELA funding at least\u00a0until Sunday<\/a>. Political cover would be needed for any further actions though.<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n

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Why Grexit is the most likely outcome Ahead of Greece\u2019s referendum on a bailout plan in early July, EU decision makers, including Eurogroup Chairman Jeroen Dijsselbloem, warned a \u201cno\u201d vote might lead to Greece\u2019s exit from the Euro. After Greece\u2019s overwhelming \u201cno\u201d, and Eurozone leaders\u2019 latest ultimatums, there are a number of factors that indicate […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2,5],"tags":[124,233,279,7110,1167,7111,6761,2598,418,6600],"class_list":["post-9841","post","type-post","status-publish","format-standard","hentry","category-economics","category-geopolitics","tag-central-banks","tag-ecb","tag-eu","tag-european-leadership-network","tag-greece","tag-greek-central-bank","tag-greek-referendum","tag-grexit","tag-imf","tag-jeroen-dijsselbloem"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/9841","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=9841"}],"version-history":[{"count":2,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/9841\/revisions"}],"predecessor-version":[{"id":9843,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/9841\/revisions\/9843"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=9841"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=9841"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=9841"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}