The standoff between Greece and its creditors on how to proceed on its bailout program risks triggering a simultaneous cash and credit crunch, which could drive the country out of the euro area.
Here’s how a worst-case scenario could unfold:
Greece's government has about a month's cash left. That's according to sources inside the government that spoke to Bloomberg. The bailout funds Greece gets from its "Troika" of international lenders (the European Commission, the ECB and the IMF) finish at the end of February.
Anti-euro sentiment in Italy is already very strong and about to get stronger.
Eurointellihence has come interesting comments today regarding Italy.
demonstrations and protests [in Spain] are very likely now to spread to Italy.
The country’s largest union, CGIL, said there would be a public-sector
strike in September to oppose the Italian government latest austerity
plan, Il Fatto Quotidiano reports.
On June 1, former Italian Prime Minister Silvio Berlusconi said "Italy should dump the euro unless the European Central Bank agreed to inject more cash into the economy". One day later Berlusconi said the idea Italy should dump euro was a "joke".
Report Shows Netherlands Would Benefit by Leaving Eurozone
Inquiring minds are reading a 73 page detailed report The Netherlands & The Euro that explains country by country why Italy, Greece, Portugal, and Spain are going to need lots more money, and the Netherlands and Germany will end up footing the bill.
Bloomberg reports European CEOs Move Cash to GermanyGrupo Gowex (GOW), a Spanish provider of Wi-Fi wireless services, is moving funds to Germany because it expects Spain to exit the euro. German machinery maker GEA Group AG is setting maximum amounts held at any one bank.
ATHENS, Greece — Greece’s government has given the order to repay a roughly 450 million euro ($485-million) loan instalment to the International Monetary Fund due Thursday — a debt Athens had insisted it will honour despite being severely cash-strapped.
The debt stems from Greece’s international bailout, under which the country was extended 240 billion euros in rescue loans from other eurozone countries and the IMF to prevent bankruptcy.
Greece’s day of reckoning may be fast approaching. Athens will have to pony up more than €2 billion in debt payments this Friday to the ECB, the IMF, and (get this) Goldman Sachs, for an interest payment on a derivative and it’s not entirely clear where the money will come from. On Wednesday, the government will vote on a “plan” to boost liquidity which includes tapping public funds and diverting bank bailout money. Here’s Bloomberg:
By Stock Whiz:The once-taboo topic of Greece's exit from the common currency is now being openly discussed. Two years of pushing cash into the country have barely kept it afloat and Greece's political instability has injected a new urgency into the situation. Greece, which is facing its fifth year of recession, will go to a second election June 17, after its vote May 6, left no single party with more than 20% support and negotiations to create a unity government failed.