30 Mar 2015
Will Greece remain in the monetary union? – BBH
FXStreet (Barcelona) - The Brown Brothers Harriman Team comments that where Greece will remain in the monetary union still remains an open question, and with Varoufakis having failed to get other debtor countries like Spain, Italy, and France to defect from the consensus, Grexit risks are still in sight.
Key Quotes
“Recently, Soros suggested the risk was 50/50 but we still don’t think the odds of a Grexit are nearly as high. Recall in 2010 when the Greek debt crisis emerged, indicative prices at book makers put the odds as high as 70% that Greece would leave.”
“Although Greek Finance Minister Varoufakis is reputed to be an expert in game theory, it seems that the Greek government knows only one game, and it is brinkmanship. A brink is approaching as the Greek government runs out of cash.”
“Reports already indicate that it is conducting swaps with other government institutions to raise cash as a payment to creditors loom at the same time as the wage bill for civil servants and pensions are coming due.”
“Varoufakis has failed to get other debtor countries like Spain, Italy, and France to defect from the consensus. His tactics have failed to isolate Germany. His proposal to have tourists and/or students report on tax evasion insults the intelligence of his counterparts, which Varoufakis has also done. No wonder that he appears to have been sidelined as the brink draws nears.”
“Rumors circulated before the weekend that Varoufakis, who is not a member of Syriza, resigned, but were officially denied (though we would not be surprised if this were to happen in the coming months). It may be too late to suggest Dale Carnegie's classic work "How to Win Friends and Influence People".”
“The bar to freeing up aid money is not very high. All the Greek government has to do is submit a list of a few reforms it will implement. After a couple of false starts, the Tsipras government appears to have down this before the weekend and is being reviewed.”
“Fitch grew impatient and cut the country's rating from B to CCC just before the reforms were submitted.”
Key Quotes
“Recently, Soros suggested the risk was 50/50 but we still don’t think the odds of a Grexit are nearly as high. Recall in 2010 when the Greek debt crisis emerged, indicative prices at book makers put the odds as high as 70% that Greece would leave.”
“Although Greek Finance Minister Varoufakis is reputed to be an expert in game theory, it seems that the Greek government knows only one game, and it is brinkmanship. A brink is approaching as the Greek government runs out of cash.”
“Reports already indicate that it is conducting swaps with other government institutions to raise cash as a payment to creditors loom at the same time as the wage bill for civil servants and pensions are coming due.”
“Varoufakis has failed to get other debtor countries like Spain, Italy, and France to defect from the consensus. His tactics have failed to isolate Germany. His proposal to have tourists and/or students report on tax evasion insults the intelligence of his counterparts, which Varoufakis has also done. No wonder that he appears to have been sidelined as the brink draws nears.”
“Rumors circulated before the weekend that Varoufakis, who is not a member of Syriza, resigned, but were officially denied (though we would not be surprised if this were to happen in the coming months). It may be too late to suggest Dale Carnegie's classic work "How to Win Friends and Influence People".”
“The bar to freeing up aid money is not very high. All the Greek government has to do is submit a list of a few reforms it will implement. After a couple of false starts, the Tsipras government appears to have down this before the weekend and is being reviewed.”
“Fitch grew impatient and cut the country's rating from B to CCC just before the reforms were submitted.”