Even if the Greeks vote “Yes” in Sunday’s referendum, the country will struggle to pay a bond owned by the ECB on July 20. Failing to pay could trigger the bankruptcy of the country’s entire banking system. Financial engineering may provide a solution.
Voting “Yes” in Sunday’s referendum would mean Greece suffers at least two years of recession. Voting “No” would bring financial havoc in the short run followed by the return of the drachma, hyperinflation and deep-seated economic depression. The right answer is “Yes”.
With Athens defaulting to the IMF, public opinion moving against the Greek PM and the banks closed, Tsipras seems desperate for a deal with his creditors. But it is not clear they will cut him any slack. They may prefer to deal with his successor.
Big banks break rules and pay fines. Traditionally it’s just a cost of doing business. Uber, meanwhile, pays fines when drivers violate regulations that stand in the way of its business model. Nowadays banks attract outrage, but Uber is often forgiven in the name of disruption.
Athens has declared a six-day bank holiday after talks with its creditors broke down. But there are several ways Greece can still avoid quitting the euro. The most obvious is to vote in the coming referendum for the terms offered by the euro zone and International Monetary Fund.
The Greek PM is offering the people a choice between bad and extremely bad. Capital controls are likely before a July 5 vote on the creditors’ terms. It’s not clear their offer will be on the table even if the people want it. If they don’t, the drachma and more misery lie ahead.
Pope Francis says we are permanently indebted to the world in which we live. It’s different for financial promises which he says should sometimes be forgiven. In a divided world, that means the rich must help the poor find the money they need to honour their environmental debts.
The prime minister wants to help build 20 mln new homes for the poor in seven years. That’s a challenge for a construction industry beset by unsold inventory and graft; and for capital-starved banks. But success would mean $250 bln in investment and a shot at rapid urbanisation.
Fiat Chrysler CEO Sergio Marchionne is the one leading a coercive charm offensive for car industry consolidation, but it wouldn’t be happening without the Agnelli scion’s support. Exor’s hostile bid for PartnerRe signals a hard-nosed approach that GM and others shouldn’t dismiss.
If Greece collapses, the biggest chunk of the blame will go to whoever behaves most unreasonably in the final stages of the current game of chicken. So both sides have an incentive to accommodate each other’s reasonable positions. Hopefully, they realise this.