A Grexit Looks Almost Inescapable

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from Naked Capitalism:


A Grexit Looks Almost Inescapable
Posted on July 12, 2015 by Yves Smith


Despite my generally dour outlook, I never thought we’d arrive at the insane juncture we are at now, that of a Grexit being all but baked in. This would be a catastrophic outcome, most of all for the Greek 99%. If a Grexit comes to pass, it should deservedly blacken the names of everyone involved, most of all Merkel, whose incrementalism meant that all of the unresolved contradictions of the Eurozone produced intensifying pressure on its fault lines, and Greece proved to be the breaking point. But as we’ll see soon, her finance minister Wolfgang Schauble would also get a particularly large badge of dishonor.

You don’t need to know much to know that the odds of Greece escaping a Grezit are becoming vanishingly small as time progresses, and there is perilously little time left. And mind you, this sorry trajectory is occurring even after the Greek government prostrated itself and offered to meet even more stringent conditions than its voters overwhelmingly rejected in a referendum less than a week ago.

Greek banks will die by the end of the day Monday if the ECB does not give them more liquidity under the ELA. That pretty much means a Grexit. Even if they get some ELA funds, it’s almost certain depositors will suck the money right out unless very stringent measures are taken to make sure the funds are used almost entirely on behalf of importers (and even that could be abused to get cash out).

The ECB will not give more funds under the ELA unless it gets a guarantee from Eurozone members. That is just about as hard as getting a deal done, despite much smaller amounts of money at risk, but it is the only mechanism that looks to be open for an 11th hour respite.

Too many Eurozone members are opposed to Greece for a deal for it to get done on Sunday. This map was posted by Ambrose Evans-Prichrd yesterday. Remember that Eurozone rules require unanimous decision: ...................(more)

http://www.nakedcapitalism.com/2015/07/a-grexit-looks-almost-inescapable.html

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