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All the “tea leaf” readers are rather humorous. They speak as if everything will be orderly and every step or contingency has been planned for. When the EU matchstick house gets hit by Greek lightning we’ll see how fast the ECB gets the fire under control.
That thinking worked out really well in 2000 & 2008. /s
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That said, this is how Goldman handicaps the possible voting outcomes and the subsequent reactions:
Result of referendum likely to prove less pivotal than how Greek domestic politics evolves in response to it. We envisage three main scenarios following the referendum:
1. A ‘Yes’ vote, followed closely by the resignation of Messrs. Tsipras and Varoufakis and the formation of a new Greek government. This is likely to be the most market-friendly outcome. Clearly, its implications will hinge crucially on the character of the new government. A government committed to reform, credible in the eyes of the creditor institutions and with a mandate to act (e.g., a technocratic government enjoying a broad base of parliamentary support and committed to a limited tenure followed by elections) could move forward to a new programme that would allow a resumption of Greece’s financial and liquidity support. Weaker governments that fall short on these dimensions would likely struggle to move forward with the same vigour and pace.
2. A ‘Yes’ vote, with the current government seeking to remain in power. Such an outcome appears inherently unstable. Creditors are unlikely to resume funding Greece under a Tsipras government, given the breakdown of trust resulting from the recent painful negotiations. The Greek economy would thus remain mired in its current state of ‘suspended animation’ with banks closed. Eventually the political contradictions and economic fragilities that would follow are likely to create powerful forces for political change in Greece. In our view, these forces are more likely to lead towards a rapprochement with creditors, but a more negative dynamic towards ‘Grexit’ cannot be ruled out.
3. A ‘No’ vote, in which the current government becomes more politically entrenched. This is likely to be viewed negatively by markets. We do not see such an outcome as necessarily implying a definitive ‘Grexit’. In the first instance, such an outcome is likely to perpetuate the status quo: the European authorities would neither extend further financial and liquidity support nor engage in a new round of negotiation with the Greek government offering more favourable terms. As a result, Greek banks would remain closed and the economic situation would deteriorate, ultimately triggering political change as the economy seizes up. Of course, that change could move in a chaotic direction leading to a ‘Grexit’. Uncertainty is clearly higher in this scenario. But our base case would remain that any attempt to shift policies in the direction of exit would prompt a domestic political response bringing down the government and moving to an accord with Brussels to maintain membership of the Euro area.