Don't forget about Greece...

GREECE: It will leave the eurozone, even though it doesn’t want to

Greece can’t live on thin air during August

the Slog,

23 July, 2012

The media spotlight at the moment appears to be on Spain, when it isn’t on the Olympics. But what it should be on is Greece.

In the last two days, ominous speeches have emanated from the Bundestag and Bankfurt. Greece, they say, is already backsliding. This whole bailout thing, they insist, is an expensive joke.

Brussels spokespersons point out that the next tranche of bailout cash isn’t due until September.

The IMF has publicly suggested it will not lend Greece any more money. (Slog sources say that internally and secretly, the IMF has decided not to lend the eurozone any more money).

“Significant [Greek] delays in programme implementation have occurred due to the double parliamentary elections in the spring,” said a faceless Sprout this morning, adding “the decision on the next disbursement will be taken in the near future, although it is unlikely to happen before September”.

Hark: no decision until September, and studious avoidance of any sign that the decision will be positive in Greece’s favour.

This morning, SYRIZA leader Alexis Tsipras urged the Athens government to reject the austerity programme, as it was ‘programmed’ to produce Greek default, and exit from the eurozone. The Slog first pointed this out in April, complete with figures showing how Greece was doomed to incur yet more debt by accepting the Brussels Accord.

The date today is July 23rd. Slog contacts in Athens and Paris – and a former bondholder representative – have concurred over the last 24 hours on one thing: Greece will default before that September money comes through. In the Daily Telegraph later today (Monday) Ambrose Evans-Pritchard is saying something very similar. Greece, he suggests, “is being asphyxiated”.

Berlin-am-Brussels is telling anyone prepared to concentrate that Greece is about to be kicked out of the euro. In my view, within six months Alexis Tsipras will be Prime Minister of a Greece returning to the Drachma.

I doubt if this will be a drama for the EU – although it could well be for Credit Agricole bank. In my opinion it will be good for Greece. But the denouement in Spain and Italy will be the end for the Fiskalunion…and the eurozone.

Berlin is still, I believe, in a race with Athens to leave the euro first. Stay tuned.

See also