On 17 June Greece goes to the polls and there he played his stay in the euro. Growing fears of a run on deposits in the weaker nations of the area.
On June 17 will be D- Day for which the Greeks make the final decision about staying in the euro and with it, the support they have been providing their neighbors. That day will be held parliamentary elections and, according to surveys, the winner will be the leader of the radical left-wing coalition, Alexis Tsipras, who goes forth, among other things, it proposes not to continue paying the debt.
In his campaign speeches, Tsipras argues that the austerity measures dictated by its European partners, particularly Germany, are barbaric and that they are “bluffing” when they say they are not going to continue helping.
These words have echoed in an electorate fairly beaten by reductions in wages and holidays as well as increases in pension ages, but that although they do not want more austerity, do not want to leave the euro, unavoidable situation if they fail to pay .
Contrary to what promises Tsipras, in that scenario your neighbors would not agree with keeping the aid to Greece and the most annoying would be rescued countries like Ireland and Portugal, which does have tightened their belts and dutifully paying their debt .
The output of the euro in Greece, which already has its own term, Grexit (by its association with the word out, in English) is increasingly likely and although European authorities, the IMF and the same Tsipras say it is not convenient, prestigious analysts, such as Nobel laureate Paul Krugman, he is considered inevitable.
He even said that German Chancellor Angela Merkel, would have proposed to the current Greek President Karolos Papoulias, linking to the June elections a referendum on the country’s standing in the Euro Zone.
The German government denied that proposal, but a report by Der Spiegel says that one thing is what is said officially over and over what happens behind closed doors and refers to a meeting of finance ministers from the euro area held on 21 May, in which these threatened to take Greece out of the monetary union and said that if each made a vote that would be the result. Also emphasized the possibility of a referendum, as if the Greeks decide to stay must comply with the fiscal adjustment implemented by all partners.
They are not ready
Although the Greek crisis is more than two years and has said repeatedly that the most serious of leaving the euro would be the contagion effect on other weak economies of the region (such as Spain, Portugal, Ireland and Italy), it appears that Europeans were not prepared for this scenario, at least not the banks, which are the first to absorb the shock.
A survey of 73 global banks Barclays shows that only 12% have advanced in their plans for dealing with the departure of one or more countries of the euro area and, although they have reduced their exposure to Greek debt, they remain highly correlated. The French bank has U.S. $ 544,000 in May billion in assets in the neighborhood, the U.S. $ 427,000 million German and English U.S. $ 303,000 million.
This is compounded by the growing risk of a run on bank deposits of southeastern Europe, particularly the Spanish.
After the turbulence caused by the nationalization of Bankia, now estimated that, following the crisis in Spain, the bad loans come this year to 260,000 million euros. This estimate is from the Institute of International Finance (IIF), guild meets the world’s leading banks and that was the one who negotiated the Greek debt reduction.
His expectation is based on the calculations made for Ireland, when he was rescued, but said that in the case of Spain is worse because it has a more gloomy employment and growth. The IFI believes that stores are doing the Spanish banks will not be sufficient and the government will have to go out and lend a hand, but not yet known how much it will cost.
For now, the Spanish government hired independent appraisers to determine the true health of the Spanish banking system.
Whatever the outcome of this assessment, the fact is that if his frail health adds the output of the euro in Greece, the impact can be catastrophic, with a run on deposits in the Hellenic country and is being presented due to to have euros in cash is the way many Greeks believe the return address to a currency that will be devalued.
Along with Spain, the most serious effects will also Grexit to other Europeans and set a precedent for countries as far away as Jamaica, which is also heavily in debt and could decide to stop paying.
Other countries, however, strengthen the rights of creditors, while for analysts will be a nightmare to decipher what’s coming in the next two years. So, on June 17 will be the day D of the global economy.
One of the few who would be happy with the output of the euro in Greece is the British firm De La Rue, which describes itself as a major world currencies printer to be involved in the production of banknotes in 150 countries. Its stock has risen 19% in the last year in anticipation of having to re-print drachmas.