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From the end of the AEP column:
Alekos Flambouraris, the government affairs minister, has already begun uttering the fatal word "delay", as if were possible to delay an IMF payment without triggering a total collapse of confidence. Syriza insiders warn privately that default is becoming an alarmingly real possibility. "It is so bad that anything could happen. I can't talk any more, the phones are bugged," said one official.

He blamed the European Central Bank (ECB) for setting off a "self-fulfilling deposit flight" from the banking system by refusing to accept Greek collateral in exchange for loans. This decision was made within days of Syriza's landslide election, and before EMU's elected leaders had issued any opinion.

The ECB's pre-emptive move is seen in Athens as counter-insurgency warfare against the first radical-Left party elected in Western Europe since 1945. It will not be forgotten lightly.

The outflows were brisk even before that. Deposit losses reached €12.8bn in January. This is showing up in the "Target2" payment data of the ECB system. The Greek central bank's liabilities to the rest of the EMU network rocketed from €49bn in December to €76bn in January as capital flight accelerated. They may have hit €100bn by now.

This is double-edged. Creditors have even more to lose if Greece spins out of control. A full repudiation of debt to the EMU institutions and states would cost over €300bn. It would be the biggest default of all time, by an order of magnitude.

I had read the same post by Yves but decided not to quote any of it. She spent years with Nomura and has the perspective and experience of a large bank bank executive. She has much more than that, but that was her home for so many years it is not possible not to be seriously influenced by that mind set. Bankers have never dealt easily with revolutionaries, except when they can easily have them crushed. And what is happening is much more political economics than economics a la 'mainstream' economics, which likes to pretend politics has nothing to do with economics. Yves knows this also, but it is hardly her long suit.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Mar 2nd, 2015 at 11:38:38 PM EST
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