Ever since Syriza took over the Greek government and has refused, at least until now, to concede to every Troika demand of perpetuating a status quo which it was elected with a mandate to overturn, Europe has done everything in its power to make not only Syriza’s life increasingly difficult and hostile, but has taken every opportunity to turn the Greek population against its rulers, in hopes that a more “moderate”, technocrat government would replace the “radical leftists.” So far it has failed, despite the best attempts by the ECB and the European Commission to sput a terminal bank run.
The problem for Greece is that the government has run out of cash. Long ago in fact, and as reported earlier, the country has just two weeks of cash left and the next IMF payment will certainly not be made unless the IMF first finds a way to inject some more money into Greece (so the IMF can essentially repay the IMF), which however won’t happen without a deal first being implemented.
The other problem is that Greece has run out of time to get a deal in order, especially since with every incremental negotiation, the Syriza government repeats it has substantial “red lines” it won’t cross, something the Troika takes as a direct ultimatum. And the ECB, the IMF and the European Commission are not good at handling ultimatums.
Which is perhaps why the push to force a terminal bank run in Greece took on an added urgency today when first Moody’s and then Schauble, did everything in their power to strongarm Tsipras into agreeing with Troika demands, or else suffer the consequences of a Grexit: one which will have dire consequences for all of Europe, but which Europe is naively ignoring just because the recent launch of the ECB’s QE is making the underlying tension in the economy and financial markets (which no longer exist courtesy of precisely this QE).
The gloves officially came off just before the market open today when Moody’s released a report titled “Outlook for Greece’s banking system is negative” in which it did the unthinkable: it explicitly said that the worst case for Greece is now an all but certain outcome if the government doesn’t concede to the Troika, or Institutions, or whatever they are called today.
