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Greece contemplates nuclear options--some chickens come home to roostGreece Contemplates Nuclear Options: May Print Euros, Launch Parallel Currency, Nationalize BanksSubmitted by Tyler Durden on 07/05/2015 17:41 -0400 As we said earlier today, following today's dramatic referendum result the Greeks may have burned all symbolic bridges with the Eurozone. However, there still is one key link: the insolvent Greek banks' reliance on the ECB's goodwill via the ELA. While we have explained countless times that even a modest ELA collateral haircut would lead to depositor bail ins, here is DB's George Saravelos with a simplified version of the potential worst case for Greece in the coming days:
All of which of course, is meant to suggest that there is no formal way to expel Greece from the Euro and only an economic and financial collapse is what the Troika and ECB have left as a negotiating card. However, that cuts both ways, because while Greece and the ECB may be on the verge of a terminal fall out, Greece still has something of great value: a Euro printing press. It may not get to there: according to Telegraph's Ambrose Evans Pritchard who quotes what appears to be a direct quote to him from Yanis Varoufakis, Greece will, "If necessary... issue parallel liquidity and California-style IOU's, in an electronic form. We should have done it a week ago."
In other words: in the Euro... but not really in the Euro. But that's not all, because depending just how aggressively the ECB escalates events with Athens, Greece may ttake it two steps further, first in the form of nationalizing the banks and second, by engaging in the terminal taboo of "irreversibility" printing the currency of which it is no longer a member!
And who "unwittingly" unleashed all of this?
Recall last week we asked "Did The IMF Just Open Pandora's Box?" We just got the answer. Our advice to Mme Lagarde: avoid stays at the Sofitel NYC for the next few weeks. As for Europe: welcome to your own personal Lehman weekend. We hope you too enjoy making it all up as you go along, because you have officially entered the heart of monetary darkness. |
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