Your Greek primer

It appears the Greek referendum that begins today is too close to call:


From Credit Suisse via Forexlive here’s the scenarios:

1- “Victory of the “No” camp, would immediately cast markets in uncharted territory. The vote alone might not necessarily trigger a systemic reaction, but we would expect the increase in uncertainty to weigh on EUR and on risk assets, with surging demand for “safe haven” currencies such USD, CHF, JPY and GBP,” CS projects.

2- In the event of a “Yes” vote, we think the likely knee-jerk move higher in EURUSD would likely be short-lived.  The victory of the “Yes” camp, would likely have a more limited impact on monetary policy stances outside of the Euro area, in our view. In other words, the removal of the immediate risk of a potentially systemic event would allow markets to refocus on the policy divergence story,” CS adds.

3- “Finally, while a “yes” victory would reduce the immediate risk of a Greek exit from the euroarea, many aspects of the post-vote outlook would remain very uncertain. As an example, a minimally reworked extension of the now expired Greek bailout terms could be viewed by markets as insufficient to prevent renewed flaring up of peripheral risk later this year,” CS argues.

4- “We remain firmly of the view that this story remains EUR bearish,” CS concludes.

I agree and will only add that the possibility of social breakdown is high no matter which way the vote goes.

Houses and Holes
Latest posts by Houses and Holes (see all)


  1. I’m thinking if there’s a no vote, the EU will quickly return with a revised offer. There’s much more at stake here for the EU than simply losing on member.

    • Exactly. A no vote is less likely to lead to violence. A yes vote has the older, wealthier (& the troika) standing over the young, unemployed & elderly.

      Middle finger goes up.
      Real negotiations start.

  2. I agree. No (as tough as that will be) is in my opinion the only way that the Greeks can get a wokable future. The problem is that the media is in the hands of the Troika and are scaring everyone so much that the status quo bias is likely to hold sway.

  3. Ronin8317MEMBER

    I expect a ‘yes’ vote. If the Greek people have the courage to vote no, they would not be in this mess in the first place.

  4. “I agree and will only add that the possibility of social breakdown is high no matter which way the vote goes.”
    Sadly I think the chances of this are 100%. I doubt that even in the best case the scenario banks will re open even if they did deposits would be emptied by lunch time and you cant have a civil society when the middle class has just lost everything.
    Seems for those that have it in Greece, just like the Ukrain and Russia recently it will be Barbarous Relic 1 : Fiat money Nil.

    • +1. Yep, anything can happen. The tanks might roll if it gets bad enough, then Europe will have little choice but throw Greece out or be seen on the side of the colonels. What irony. Euro, fricken stupid, destructive idea – I’ve been against it since the beginning.

      What the Greeks need to realise is that their tinpot country is in no way up to the standards required to share a currency with Germany. That is what they simply cannot get their heads around. Same with the other peripheral countries. Not even the UK or France are really up to it.

    • Not just half – the young half.

      Piss off the entire youth of your country and you are almost guaranteed of swinging from a rafter.

      • Same thing should be happening in this country. I see this whole thing as an intergenerational issue not just an EU Vs. Greece thing.

      • Kolchack, that’s just ageism bullshit. Greek youth unemployment is 42% the overall unemployment rate is 25%. This is a social disaster of immense proportion bearing NO relationship to Australia.

        I’m getting really fucking sick and tired of hearing this grey gouge nonsense. Your sounding like a self entitled prick.

      • Oh Diddums…did I hurt your feelings? Nicely constructed argument by the way.
        I’m not so sure the 42% of unemployed young Greeks are really too worried about hurting the feelings of the ruling boomer classes.

      • It’s not just boomers kolchak, most of gen x and the relicts of the pre boomers are in it too.

        That’s part of the problem with the “intergenerational” shtick. There’s more than one generation involved. Of course it’s convenient for gen x and pre boomers to want to load any responsibility onto the boomers alone, but that’s another story.

      • Actually Kolchack it takes more than a limp dick to get me upset. If you stay away from stereotypes and pop culture statements, we’ll get along just fine.

        The response from emess is on the money. But to be precise, the entire intergenerational argument is just a mainstream smoke screen to shift the debate from fact to fallacy. So if you come at it again expect me to troll you.

      • Hahaha. Gee, you seemed to get pretty angry pretty quickly. Funny how we actually agree on the Greek vote Malcolm and yet I still think you’re an utter dickhead.

    • That depends on what PR you subscribe to. Alarm bells sounds when the issue involves soveriegn debt and ‘moral hazard’ gets mentioned. Lending to sovereign governments is inherently hazardous and lenders who choose to do so must accept that sometimes they will not get paid.

  5. Before the Scottish independent vote I said to people I 100% guarantee it will be rejected – guarantee it.

    People wanted to know how I knew – simple – these votes are rigged and always have been.

    Anyone who says so, claims so, even hypothesises so is labelled a lunatic conspititard – making the entire process that much easier.

    The polls and swings are almost identical to Scotland.

    Greece vote will be rigged.

    Good luck

    • Plenty of ASIO types in the AEC, those missing Palmer Party votes in WA would have changed the Australian political landscape.

      As for Greece, they need to move to the yuan, a six to one reverse split sounds about right for Euros to Yuan and the removal of credit.

      • Anyone looking for the Black Swan event in global finance need look no further than the CIPS coming in the next few months.

        Will change everything.

        Modern economics is warfare – pure and simple. Make absolutely no mistake about that.

        Stock market crash is being accused of happening due to external influences – maybe, maybe not – however I would not simply write that off as conspiracy.

      • @chisr ASIO being embedded in the AEC is well within their remit. Can you think of anything more important for them to protect than the integrity of the electoral process ?

        The worry is the way edge case informal votes are winnowed out in a continuing process by increasingly ” experienced officers “. There needs to be a standardised way to reject votes, not relying on someones subjective opinion. See here

        They were mainly Liberal votes that went missing, they were just a bit too strategic set of votes for me to accept it as happenstance.

  6. Here is what I dont understand: why has there not been bank runs in spain, italy, portugal?

    These people have seen what has happened in greece, they know they are the next dominos to fall

    Greek depositholders will be getting substantial haircuts

    These italian/spanish/portugese depositholders are getting essentially 0 interest from the bank anyway

    Id have everything in physical cash (even USD) if not assets

    Why are they so complacent?

    • Patience. The polls open in about 1 hr. I dont think the world is prepared for what may come the weeks/months ahead.

      • The best background I’ve read this weekend is Henry Ergas in The Weekend Oz – recommended to all – subscription required or buy hard copy – Weekend Oz, best read each and every weekend.

        “But that outcome will not fall from the skies; it requires reforms the Greek electorate has consistently rejected. There is a real risk that come Sunday, the Greeks, instead of peace, may find they have unleashed the furies.”

      • 3d,

        He’s misinterpreting the bigger point being made in that interfluidity article. That is that for a system to work, the lenders HAVE TO lend with due diligence, and not rely on the morality of borrowers.

        It would be nice if, for example, I could go down the corner, give out loans to whomever knowing they have no way to pay me back, and then somehow they pay me back. But frankly that’s just stupid, and if I tried it, you’d be justified in laughing at me. If I further suggested the government bail me out, I think you might agree that “cheeky” would be a good word to describe my request.

        Yet when highly paid bankers and EU bureacrats, and EU politicians do it, somehow we should take them seriously and do what they want.

        That is what the interfluidity link referred to in your link says. Why is it unreasonable?

      • Even StevenMEMBER

        Emess: there’s no doubt some responsibility for the circumstances falls upon the lender – but remember – it’s the borrowers, not the lenders, who are breaking the terms of the agreement.

        The onus is on the Greeks to repay. The Greeks willfully squandered the largesse that was extended to them… For them to claim that they were hopeless money-managers and should never have been provided the money in the first place is simply not acceptable. That type of ‘cop-out’ reasoning goes to the heart of why Greece is in the position it is today. For them, it is always someone else’s fault. Funny that.

        There will be some individual heart-rending stories that will come out of Greece in coming months, but as a nation, they have gotten more or less what they deserve.

      • Even, the point is, the Greeks can’t pay.

        So yes, morally and legally they should pay, you have the right of that. But if I lend to someone who I know can’t pay me back, I may have all the moral and legal force at my back, but I won’t get my money.

        That’s the point, there’s no way of getting the money back if you lend to someone who can’t pay you back, and you are daft if you do.

        If I said I loaned a drug addict some money, and then complained because they didn’t pay me back, would you have any sympathy for me? Would you be happy for me to be bailed out using your taxes?

        If so, I’m going to set up a finance company for lending money to derros and if they don’t repay me I’ll seek a government bail out. After all that’s effectively what Greece’s creditors have done. All nice in theory this bit about borrowers responsibilities, but practically, not so much.

    • I think we’re now coming to the end game for Greece – they are just not the issue they once were for the Euro. Greek and Spanish unemployment may be similar but Spain’s GDP is only down about 6 per cent from its 2008 high point whereas Greece is down about 20 per cent.. The other countries have put in many of the hard reforms demanded and at this point. Spain is one of the fastest growing economies in Europe, and is possibly pulling Portugal along with it. Italy has a strong CAD and despite its debt to GDP ratio is stable. Greek contagion is not feared as it was three years ago. Maybe they and the EU are deluded. We’ll see.

      • I meant to say Italy’s current account is fine and government debt to gdp ratio is stable.

      • The 2014 index was 97.4 against the base year 2010 (100). The trading economics GDP improvement is 1% for 1/7/2015. Successive indices from 2010 are 100.0, 99.4, 97.3, 96.1, 97.4. Whatever the 1% growth does for the 2015 figure……can’t extrapolate yet, but I’m not convinced it reflects recovery. Will be interested to see when Eurostat numbers are updated.
        Italy is 100.0, 100.6, 97.8, 96.1, 95.7 by way of comparison – didn’t look up the TE data for 2015, but Portugal is worse. These regions are tracking similarly in what I think is a holding pattern even Greece albeit at a lower index for obvious reasons.
        Overall the data seems to reflect the north/south states variability, but again the updated data will be interesting.

    • Didn’t you do that 3 years ago? I did! And apart from being looked at and quizzed by the bank store staff as though I was going to pay off my dealer, holding the cash was more trouble than it was worth. Perhaps the Spanish etc citizens have likewise had enough dry runs that it’s become a nuisance that’s not worth the bother. As Greece has shown them, even if it does get serious there’s enough time in the weeks prior to a real panic to get cash if need be.

    • Recency bias… the same reason people in Sydney borrow 8 times their income to buy a shit home

    • I doubt there will be much of bank run in Portugal. Portuguese people are frankly pissed off in regards to the Greeks.

      Portuguese are too proud to hurt their country by running to the bank. They seek nothing more than to pay down their debt and move on.

      In saying that roughly 75-80% of 2015 debt repayments have allready been made and by years end they should have a considerable amount of 2016 debt paid for.

      Portuguese are very optimistic about their future, liquidity is slowly being released back into productive export industries and there is Beleif that the economy will really start improving in a year or so.

      • Yea – I know little of what’s going on on the ground but I have seen Portuguese companies showing up in textiles, ceramic and wood export markets. They seem to have some grass roots manufacturing growth going on.

      • Hubert Marcks unloads on the pseudo economic commentators:

        “One has to give credit to channel 4 for publicizing unedited camera footage of the interview, at least on youtube – and of course to Minister Varoufakis for again serving transparency and democracy by posting it.
        Although it must be said that by talking about the european tax-payers demanding their money back, Mr Mason commits the same mistake – intentionally or not – that we have seen made by many politicians opposed to the Syriza government and repeated over and over again by journalists all over the continent without question.
        The electorates of Lithuania, Slovakia or other poor member countries under the yoke of austerity programmes imposed upon them by national governments who appear to be willing to sell their own mothers in order to please their german overlords, are being repeatedly abused as a bargaining chip by the conservative elites who obviously would sacrifice eleven million greeks in order to maintain an unsustainable economic model that puts the wealth of a small elite over the welfare of the people.
        If the people of other member states – even the germans – were given the same kind of information Mr Varoufakis and his allies are so desperately trying to make known to the greater public, they would probably chase these hypocrites out of office or at least vote ‘no’ to the programmes if they had the chance to do so.
        Unfortunately, the neoliberal propaganda machine is running red-hot while inverting reality and building the legend of a united europe, represented by the 18 creditors, that is defending european democracy and unity against the self-serving greek agents of chaos and destruction.

        I wish Syriza all the best for today and a giant, crushing “Oxi!” to the german government and the rest of the hypocrites!”

        This encapsulates the whole sorry mess quite nicely.

      • Varoufakis is putting his game theory knowledge to work. Hopefully, the majority of Greeks will vote No.

    • Yeah, I don’t think the ECB are the problem. It’s the Troika’s truculent negotiating attitude. The states are interfering in the operation of the ECB as a central banker whereas they should be independent.
      Interestingly Brussels dropped some deal on the table but Syriza has insisted they not negotiate until after the result. Yanis said “”Ever since declared a referendum and incensed our European partners we had the most interesting proposals coming from Brussels. Perhaps this referendum and impasse that it represents concentrated several minds in Brussels …….good proposals…..that we would sign on the dotted line for.” ( parts edited to relay the message content).

  7. What is most disgusting is the greek expats flying back out of self interest because they want their free uni, business freedom or freedom to piggy bank their retirement in greece.

    Disgusting, filthy rats.

    Find out soon either way!

  8. Yes or No, it will be ugly.
    Greek has had political violence on and off since Lord Byron fought in the war of Independence. Almost always between the Haves and Have nots but with different wrapping (be it Communism in the cold war era, Monarchism, Venizelosism before then, etc). This is likely to end up heading the same way.

  9. I agree with Galbraith, as above : Greece vote will be rigged.
    But if I were a Greek and able to vote it would be an OXI vote from me. NO.

  10. Even StevenMEMBER

    Rigged? Which way? A yes or a no? By whom? Conspiracy theorists… Can you imagine how hard it would be to confiscate / amend ballot papers without someone talking?

    Regardless, Greece is stuffed either way. They cannot pay back the full amount of debt owed. That is virtually certain. debt restructuring or default must occur – the only uncertainty is timing.

    Social unrest is unavoidable.

    If Greece refuses to take hard measures (including highly controversial ones such as increasing pension age) they will be cut off from ECB support and they will need to move to a new currency. Tourism exposed industries will continue to be priced in Euros so the impact there will be muted. Non tourism industries will be severely affected.

    The Greeks made their bed many years ago and now they can lie in it. They just weren’t expecting reality to catch up with them so soon.