It appears that the Greeks have decided that they are unwilling to compromise and the rest of the Eurogroup have decided that they won't throw good money after bad.
There then comes the technical question of how to establish an economy based upon the "new drachma". When changes are planned to financial software such as benefits and taxation quite a long period of planning is needed before the systems are in place to cope with this. It is really not practical to establish the software and systems for a completely new currency overnight. That would imply the greek government trying to cope with making payments in a situation where those banks holding a lot of greek debt are unable to operate.
I am not quite sure how this actually works.
It does seem, however, that after today the ball is in the Greek government court. They can come back to the EuroGroup suggesting that they agree to something akin to the deal. However, the timescale to avoid chaos is this week.
This creates quite a considerable element of uncertainty. My feeling is that with QE and other tools that the ECB has that things will settle down reasonably quickly outside Greece. However, I would expect some turbulance in the mean time.
There then comes the technical question of how to establish an economy based upon the "new drachma". When changes are planned to financial software such as benefits and taxation quite a long period of planning is needed before the systems are in place to cope with this. It is really not practical to establish the software and systems for a completely new currency overnight. That would imply the greek government trying to cope with making payments in a situation where those banks holding a lot of greek debt are unable to operate.
I am not quite sure how this actually works.
It does seem, however, that after today the ball is in the Greek government court. They can come back to the EuroGroup suggesting that they agree to something akin to the deal. However, the timescale to avoid chaos is this week.
This creates quite a considerable element of uncertainty. My feeling is that with QE and other tools that the ECB has that things will settle down reasonably quickly outside Greece. However, I would expect some turbulance in the mean time.
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