With the Greek drama headed into its final act and Alexis Tsipras stuck between an obstinate Germany and a recalcitrant Left Platform, many wonder if the introduction of an alternative currency in Greece is now a foregone conclusion. Even if Athens and Brussels manage to strike a deal over the weekend, the country still faces an acute cash shortage and a severe credit crunch that threatens to create a scarcity of critical imported goods.
Earlier today, Kathimerini reported that the Greek government, facing an acute cash crunch and staring down the possibility that the country will soon face a shortage of critical imported goods, is making preparations for the introduction of an alternative currency.
Back in May we outlined the cost to the Greek economy of each day without a deal between Athens and creditors. At the time, a report from the Hellenic Confederation of Commerce and Enterprises showed that 60 businesses closed and 613 jobs were lost for each business day that the crisis persisted without a resolution.
Switching back to the drachma would be chaotic if Greece has to ditch euros. The country will hold a crucial referendum on Sunday. Millions of citizens will vote "Yes" or "No" on whether their government should accept a set of conditions that would unlock a fresh bailout program from euro-area creditors, and inject cash into the economy.
Greece's euro membership is dangling by a thread. According to finance ministers in the rest of Europe, the Greek government has just a few days left to preserve its place in the currency union. Based on how talks have gone so far, the chances of a sudden deal don't look too positive.
LONDON: Mainstream economic thinking may hold that Greece should stay in the euro zone, but there are those who argue that abandoning the single currency will give the cash-strapped and debt-laden country just the boost it needs. Greece's economy is so depressed, they argue, that unless it regains the competitive edge a massive one-off currency devaluation could offer, it will remain lifeless. Until then, the idea of a euro zone exit - either by accident or design - will keep on returning.
Submitted by Patrick Barron via The Mises Institute, Too much of the commentary about the Greek crisis has focused on whether or not Greece should drop the euro and not enough on the structural problems arising out of decades of socialism. Meanwhile, the Greek government has borrowed more money than the Greek people can possibly repay, and debased money will not make this fact disappear. On the contrary, more easy money will cause even more harm.
As detailed here earlier, Greek PM Alexis Tsipras will attempt to win back the support of more than 30 Syriza lawmakers who defected to vote against the first set of bailout prior actions last week. The move destabilized an already tenuous political situation, laid bare the divisions within Tsipras’ party, and raised the possibility that the PM could face a vote of no confidence and early elections.
ICAP Plc, the world's largest inter-dealer broker (one that carries out transactions for financial institutions rather than private individuals), is now Testing Trades In Greek Drachma Against Dollar, Euro
ICAP Plc is preparing its electronic trading platforms for Greece's potential exit from the euro and a return to the drachma, senior executives at the inter-dealer broker said Sunday.