Europe's latest media arrival, Politco.eu is an outfit made to thrill... or to add thrill to the banal, boring, grey, stodgy (you name it) world of Brussels. And it is off with a flying start: http://www.politico.eu/article/a-crazy-european-storm/ The headline reads "A Carzy European Storm" and promises the risks of Grexit, Greefault, with some pepper garnish of Brexit too. It is as if someone at a gas station in Washington DC picked an old newspaper and gave it a 'Look wha's up in old crazy Europe!' yelp.
The premise is that Greece is about to face EUR774 mln payment to the IMF. No, we did not know this until the Politico.eu told us.
The thesis is that Greece might not repay it. No, we did not know that this was a possibility and we had no idea that the Greek Government officially said they will repay it.
The theorem is that if it is not repaid, there can be forced (by other member states) exit of Greece from the Euro.
Quote: "On May 12, after several weeks of barrel-scraping, Greece will pay back a €774 million loan to the IMF. Or maybe not. Which would then trigger the dreaded debt-default spiral that could push Greece out of the monetary union."
Proof [Politico.eu styled]: "“In 30 years here I’ve never seen such a crazy climate,” says a former merger-and-acquisition banker and hedge fund manager now running a corporate-finance advisory boutique." Which begs a question, was this lad asleep in 2008, 2009, 2010, 2011, 2012, 2013, 2014... to have missed an even 'crazier' 'climate'. Or were his measures of 'crazy' somewhat at odds with normal financial markets and public opinion polling indicators?
Never mind that Politico's only data-focused source, the Grant Thornton survey says that... err... no, there is not quite panic yet about Grexit, though concerns are rather high.
Of course, no one would dispute the risk of Grexit is serious. But Politico.eu might want to actually consult direct sources on whether it is feasible and whether it can be linked (over 'next 2 months' as one source alleges) to a reasonable likelihood of Greece leaving the Euro. And, finally, they might want to rethink as to whether it is possible at all to 'push Greece out of the monetary union'.
Here are two links worth considering:
- ECB position on potential mechanics for member state exit from the Euro: see second link in this post: http://trueeconomics.blogspot.ie/2015/01/412015-greek-crisis-40-politics-1.html. For the impatient media spicers: summary is that per ECB view, "a Member State’s exit from EMU, without a parallel withdrawal from the EU, would be legally inconceivable; and that, while perhaps feasible through indirect means, a Member State’s expulsion from the EU or EMU, would be legally next to impossible."
- And here is the IMF official procedures for dealing with arrears: http://trueeconomics.blogspot.ie/2015/04/1415-greek-crisis-gaining-rhetorical.html. Again, for trigger happy journos a summary: first 3 months after arrears arising will be taken up by 'strongly worded' letters. It takes up to 15 months before a declaration on non-cooperation can be issued. Which is (1) hell of a lot longer than 2 months and (2) gives plenty of time to 'sort something out'.
Yep. An already crazy European storm that has been blowing over Greece and the euro area since mid-2008, uninterrupted, is pretty... well... crazy. But do we need another 'Spice Me Up, Scotty' media headline about it out on the web? Neah... not really...
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