Yesterday, the German Financial Times called Greeks to cast their vote in favour of pro-bailout conservative Nea Dimocratia, in an unprecendeted bold op-ed article with the title “Resist to the Demagogue” referring to the leader of Syriza, Alexis Tsipras. If you have a strong stomach, read here for more.
According to Sun Tzu, all warfare is based on deception. He’s so right.
Without exaggerating at all, we’re in a state of war- all dirty tricks and manipulation through fear now take place.
And it is effective. To some extent though.
Just step back a little and think about this: Syriza’s rise equals to “Grexit”, return to drachma and destruction or the rabbit hole is much deeper than we can possibly imagine?
The answer is that the rabbit hole is so deep beyond our thinking, but like Alice in Wonderland, we have the key to the locked doors we will decide to open.
Here’s some food for thought for all of us: According to Deutsche bank FX strategists, concerning the Greek elections outcome:
“Even a clear New Democracy win in the Greek election on Sunday would leave many questions unanswered about the ability of Greece to comply with its current agreements (even with the good faith of a Greek government). Moreover, this result would do little to address concerns over the significant imbalances within the euro zone, so we doubt that risk markets will overshoot to the high-side” (source here)
Also, according to Citi’s senior political analyst Tina Fordham, chief economist Willem Buiter, and global economist Ebrahim Rahbari:
“Any new Greek government, regardless of its composition, will struggle with implementation challenges related to the imposition of further austerity measures demanded by the Troika in exchange for further assistance,” and as a result, they “consider it likely that a new troika deal would ultimately fall apart and lead to Grexit.”
Personally, I feel that’s the case.
However, the most intriguing part in Citi’s thinking is here:
“A possible trigger would be the determination by the IMF following the first or second assessment, that it cannot disburse its next installment due under the current programme because the Greek programme is not fully funded for 12 months after the assessment. In that case some of the smaller core euro area member states that have made their contributions to the Greek EFSF programme conditional on the IMF disbursing would probably drop out too. The Greek sovereign would then be forced to default. Then the ECB would stop funding the Greek banks through the Eurosystem and through the Greek ELA. With neither the Greek sovereign nor the Greek banks having access to the lender of last resort, we believe Greece would probably leave the eurozone, as some liquidity through the issuance of New Drachma is better than no liquidity.”
So, Grexit will eventually happen, but the Citi team doesn’t think the European Central Bank, European Union, et al. will even let Greece go financially when things get really bad as described above. According to them:
‘’In order to prevent such a scenario, we believe that even if “Grexit” were to occur, Greece would stay in the European Union and receive some form of Troika or other external assistance, most likely through the Balance of Payments facility run by the European Commission and the IMF for non-euro area EU member states. Since 2008, Latvia, Hungary and Romania have been under such programmes. Support from the EIB, and from Structural and Cohesion funds would also be likely to be forthcoming. We would also expect the ECB to continue to support the Bank of Greece after a Grexit. After all, the Greek central bank would exit the Eurosystem with considerable euro-denominated debt to the Eurosystem (this could be its Target2 net debit balance – something around €100bn, or its share of the total losses suffered by the Eurosystem as a result of Greek exit, however this would be established, net of the capital it has paid into the ECB, which would, in principle, be refundable on exit)’’. (Source of info here)
To conclude, surely nobody knows what will happen tomorrow. What’s for sure is that the demonisation of Syriza and of the dangerous left that “leads us to chaos”, is I am afraid out of context- above all it’s intentionally dangerous.
I hope we all vote our conscience tomorrow and not carried away by the fear imposed on us these crazy days.
We should shield ourselves and be ready for combat for the days to come.