Today is the judgment day for Greece and a possible decision will be made on its fate. Before we get into the possibilities of the decision, one can never rule out the situation under which the can is kicked down the road. We have seen this situation over and over again, and if this situation does takes place today once again, it will be nothing but an extremely silly decision by the policy makers. The reason is that they need to address the problem not to avoid it. The process of buying the fruitless time ends the situation with nothing more than a disaster.
So, a messy exit out of the Eurozone is one of the possibility which has picked up fire among speculators. It certainly looks more likely if both parties maintain their grounds and show no flexibility in their behaviour. Having said that, Mr Tsipras has put forward his last proposal on Sunday in order to unlock the 7.2 billion euro payment. The creditors have surprisingly shown some appetite towards this, but this is usually the case when the previous proposals were submitted.
Over the weekend, there has been reports of large public rallies taking place to show their vote of confidence in their leader and to make sure they do not give up the significant elements. This shows that the proposal given by Mr Tsipras could be the final one before the country returns to its old currency and says good bye to Eurozone.
The IMF deadline is approaching rapidly and massive repayment will be due in eight days, Greece’s biggest problem remain money evaporating from its deposit accounts. With 4 billion evaporated last week and another 1 billion already lined so far for this week, the country will fight hard to stem this issue. Public has lost its trust that the banks can stay open at this pace and they want to make sure that their life saving will not be effected and therefore, they are taking matters in their own hand. These banks will only remain open as long as they have the support of the ECB’s ELA and the moment this is vanished, the banks will lower their shutters with no option in their hands.
Disclosure and Disclaimer: The above is for informational purposes only and NOT to be construed as specific trading advice. responsibility for trade decisions is solely with the reader.
by Naeem Aslam