Greece - Grexit

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    Greek Prime Minister, Alex Tsipras, said to members of the Greek parliament overnight....

    "This is going to get interesting. The current Greek ‘bailout’ program expires at the end of February unless Athens requests an extension. Athens is not going to request an extension."

    In response the German finance minister, Wolfgang Schauble, said:

    "If Greece does not want a new rescue plan, then that’s it."

    Which presumably means when the money runs out at the end of the month, Greece will be on its own.

    Even though the money runs out at the end of the month, apparently Greece has only until 16 February to request an extension. That’s next Monday.

    While a so-called Grexit, or Greek exit from the common currency, was once considered an outlier scenario, it's being increasingly bandied about. Alan Greenspan, who headed up the U.S. Federal Reserve for 19 years before retiring 2006, told BBC Sunday that, "I believe [Greece] will eventually leave. I don't think it helps them or the rest of the euro zone to remain."

    Some believe that if a deal isn't reached, Grexit will become a fait accompli.

    If there's no compromise, Greece will default on its IMF and ECB loans, it would face further deposit outflows and the ECB will cut the Greek banking system off from liquidity support, Societe Generale said in a note Wednesday, after the talks broke down.

    That would mean "Greece is de facto no longer part of the monetary union," Societe Generale said. "It could still use the euro (like Montenegro) but it would have to issue a parallel currency (IOU) to meet its domestic obligations (civil servant wages, pensions...). That would be Grexit."

    That wouldn't be a quick process though. Greece would likely need to hold fresh elections as the government won a mandate to end austerity, not to exit the euro zone, Societe Generale noted.
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