GREECE'S back is to the wall; its time has run out; it is stuck between a rock and a hard place with other rocks waiting to fall on its collective head; etc. Europe's response to Greece's overwhelming "no" vote on July 5th came through late last night. There will be no concessions made to Greece. On the contrary, by early Friday morning Greece must submit to its creditors a new bail-out proposal, which contains more cuts and more significant reforms than those in the offer voters rejected last Sunday. If it does, Greece's European partners will decide on Sunday whether to accept or reject the plan. If they accept it, or something like it, new discussions on a long-run bail-out programme (lasting 2-3 years) can begin, and the European Central Bank (ECB) will presumably step in to prevent Greek banks from collapsing. If they reject it, the ECB will withdrawal all emergency liquidity aid to Greek banks, essentially forcing the Greek government to issue an alternative currency to prevent a massive collapse of the banking system. That's assuming Greece's troubled banks don't begin failing between now and Friday.
And so now the possible...Continue reading
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