Greek banks closed, capital controls in place.

Greece will probably default tomorrow, the result of the referendum will determine if they're exiting the Euro.

Although even a Yes vote will likely involve Germany, in it's best Vader voice, stating the deal is changed and they should pray it doesn't change any further.

The referendum is effectively a vote for last weeks lottery numbers.

How much does a clue cost?

https://hbr.org/2015/06/grexit-would-be-even-more-dangerous-than-economists-realize

An informative article with somethings I haven't heard anyone else bring up.

They default tomorrow unless some last second deal is worked out. That would be hard to do though as the Greek government walked away and stopped negotiating.

For all intents and purposes default is going to mean they are out.

Nope. Default to the IMF does not have any effect on the EU and if a deal was reached later, the amount could be paid in arrears.

If and when they leave, it will be the decision of the Greeks themselves, as not having access to currency becomes more and more damaging over time.

Those crafty Germans.

It's their revenge for making them look stupid in Hogan's Heroes. Who's coming up out of the fake plastic tree trunk escape exit now?

1. Nope, Greece won't default tomorrow. Technically yes but IRL, the 'process' takes about a month when it comes to the IMF. If there are signs of movement, Lagarde can stretch it to about two months. The deciding factor is when she officially informs the board. In any case, first comes a letter demanding teh mulah.

2. There is no path out of the euro. The treaties state clearly that it's a one way street, for good reason. Again, it's a question of theory vs. reality. In reality they'd be 'out' at some point, meaning Greece would introduce a parallel currency. Basically IOUs because you can't conjure up a currency in a few days. That point comes when the ECB cuts them off. Which happens when the country is declared bankrupt by the IMF. Again, see point one.

They would still be a member of the eurozone by then. The euro would be the only official currency even though they are locked out of the system.

They can leave the EU though. In that case they can do whatever they want. There is no one who wants to take this step except for the crazy ass political fringe.

In the meantime, the ECB has the most important role of all since it provides ELA - Emergency Liquidity Assistance. About 90 billion or so have been moved to Greece so the banks could handle all the withdrawals. Capital controls, not unheard of since Cyprus 2013, should help there. They'll stop the silent bank run in its tracks so more ELA is not required. Cyprus kept it up for about two years without great repercussions.

In my humble opinion as somebody who's been in Greece a lot over the years I'll just say this: the Greek probably can't organize voting for a high school class president in a week. It's logistically impossible even for highly organized countries. Unless Syriza has planned this step and all the forgery they can get away with for months (which I doubt), the referendum just won't happen. If it does by some miracle, it will be nullified by the congressional courts in the coming months.

Putting the decision and the blame for whatever bad happens afterwards on the people is a cowardly political move. The boys gambled. They lost. Now bear the consequences: kowtow before the EU and have us all pay for your election promises or watch the country crash and burn. Neither Tsipras nor Varoufakis will go down in history as wise leaders and shrewd tacticians because either outcome probably means their downfall anyway.

Oh and btw. There is no way out of the Greek tragedy without a substantial debt cut. That, or stretching it until the 34th century. Schäuble needs to wake the fuck up and be the adult, professional part vis à vis Varoufakis. Theory. Reality. In theory, Greece has until 2057 to pay back the loans. 2015 is a tough repayment year with the next ones coming in 2019 and then again in the late 2030s. Everything in between should be smooth sailing.



In the real world the repayments don't matter. The money is lost and the repayments are so small, they'll just vanish in the national budgets. The best way of action is a simple one (and completly illegal): have the ECB buy it all up with QE money. It's a third of the trillion they'll pump into the market until 2016. Plenty to go around for the other members of the notorious Club Med and a good boost for the creditors.

Then have the ECB bury it in the deepest dungeon. Make very sure the Greek won't squander the newly freed funds but use them to get back on their feet.

I don't know where you are getting that from. They just won huge concessions; so huge that a deal suddenly becomes realistic. This would go against their campaign promise, and now they're asking the people which principle should outweigh the other. This makes good sense to me; that it seems so unusual says more about our acquiescence to a lack of democracy elsewhere.

This is not democracy. It's a panic reaction.

To what?

to the creditors not just giving in as expected. it could be a planned tactical move too (like papandreou in 2011) but it doesn't feel like one.

tsipras is 'considering' now btw. we'll probably have a deal by tonight.

personally i'm not big on direct democracy.

But the creditors gave more, not less than expected. That's one of the few aspects on which Tsipras and Merkel's account agree.

I think the expectation basically was 'Money for Nothing' (cue Mark Knopfler). But Tsipras made the mistake to communicate beforehand how they are not planning to execute anything important. The last few governments signed whatever was on the table and then ignored the demands.

I'm not saying the EU didn't make mistakes with Greece. But the Greek overdid their usual thimblerigging this time. Either Schäuble or our own Schelling said it right: He'd wish for adults on the other side of the table. It's pretty obvious neither Tsipras nor Varoufakis have the experience or clout to play chicken with the big guys. You just don't go home to badmouth the very same people you just bagged for money. I'm rather sure there is a lot of personal animosity at play here too.

Anyway, as I said. 27th hour agreement incoming.

I hope there is an agreement and that the Greeks actually follow through but there history is promising g X, Y, and Z but only doing half of X then demanding more money. I am also not convinced a debt write down is needed as there are a huge number of state assets and state owned companies is which could be privatized and the proceeds used to pay down the debt. That is what people have been trying to get them to do for five years now but which the Greeks have been refusing to do.

Greece has a pretty closed and heavily regulated economy largely to protect special interest groups from competition. Opening up their economy and allowing new competition in would create jobs and dynamism which is exactly what they need right now. To bad the Greeks are so corrupt the special interests have so far vetoed any action in that front.

Depends. Looks like Merkel isn't prepared to play ball, and Syriza have burned through trust the way Greece usually burns through money.

Another can-kicking agreement would be a bad thing. We need Grexit or we need debt write-off.

From Krugman:

Underscores just how disastrous the EU policies have been.

But no, @Aurora and @Dinner berate the Greeks for not being "adults" by refusing to continue in the same vein.

According to CNN, Greece has defaulted.

Ignoring relatity. The dumb fucks wouldn't liberalize their economy because they wanted to protect special interests while refusing to privitize publicly owned companies and assets which would have raised capital to pay down debt.

You are a drooling idiot. You have to both liberalize and enact austarity so that the goverent spends less than it takes in. Liberalization is where the new jobs and growth come from. Greece did none of that and you are a liar for only looking at half of the equation.

Liberalization and debt restructuring, yes, but austerity? That's nonsense. It guarantees worse economic performance, limiting Greek ability to grow out of the problem.

When similar things have happened in the U.S. sphere (Argentina, Mexico), the response has been bridge loan + liberalization + restructured debt. That is the proven corrective.

There's a crowd funder for everything, apparently.

http://gizmodo.com/the-campaign-to-crowdfund-greeces-bailout-has-crashed-i-1715003816

All they need is $300 billion.

In this case, with Eurozone inflation right around zero, with Greece suffering about 2% deflation a year for the past couple of years, and with the Greek economy operating staggeringly below capacity, the proper solution is probably just to just print money and give it to Greece until those things aren't true any more. That wouldn't be "responsible," but it would be responsible. It wouldn't teach Greece a lesson, but it would help the economic problems with as little pain as possible.

Basically, what should be done at this point is whatever is the exact opposite of what the sadistic austerity advocates advocate.

Sure, printing money would work, but Greece has no control over that. Hell, even Germany doesn't. It is the fatal flaw of the Eurozone -- they might just as well be using Ron Paul's gold standard if they want a currency they can't control.

I think it is important to remind people that the idea that austerity would lead to economic growth WAS AN EXCEL ERROR.

Seriously. I know it sounds crazy, but it's true. Check it out. So on this issue, Rick is correct. Austerity is a political policy not economic.

Secondly, for the Europeans *cough*Germans*cough* that get uppity when the US says they need to just write off Greece's debt, and say if it's such a good idea we should do it...

WE FUCKING DO!

You Eurobitches are throwing a fit over a one time $270 billion write off... REAL AMERICA WRITES OFF THAT MUCH EVERY TWO DAMN YEARS. Seriously, there was over $2.6 TRILLION in Federal wealth transfers from productive America to Red America between 1990 and 2009. That's what happens when you're a Union. Those areas that have actual economies have to send their money to those areas that aren't economically/socially/politically advanced enough to provide for themselves. It's just how it is. Get over it.

Actually those wealth transfers were to all the military industries in the red states.

Damn, have a bake sale! A really really really big bake sale.

We must be building our super sekret interstellar battle fleet in West Virginia.