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What options does Greece have left? As I see it, they really only have three, and all with blurry edges. First, they can cut some sort of deal with Germany (the EU) and the IMF. They can kick the can down the road by extending maturities of existing debt and restructuring it. The IMF still owes past monies pledged in bailouts, will they really throw new money away knowing it cannot be paid back? Obviously this does nothing to face the real problem, Greece simply has too much debt for the size of their economy (this is a global problem but not “admitted yet”). This option may have been taken off the table on Friday. As a side note, it was reported Friday by Der Spiegel the IMF evacuated their Athens office. Why would they do this? I can only come up with one or two scenarios. The IMF is giving up and know it is over … or, they are getting out of town while they still can. Maybe they realize massive social unrest will be unleashed and don’t want to see their employees hanging from lamp posts? This was denied by Saturday but interesting nonetheless!
Their second option is to just default. If they cannot make debt payments, they simply don’t pay and thus become classified as a default. The next question is whether or not they would stay in the EU? Would they want to? Or even be allowed to? Option number three, an offshoot of number two, is Greece defaults and they decide to leave the EU (or are kicked out) and join team Russia.
My guess is we will see Greece default, leave the EU and cut a gas pipeline deal with Russia becoming a stepping stone for China’s “silk road”. At this point, it’s the only thing that makes any sense …if you are Greek and try to do what is best for Greece. A story also making the rounds on Friday was preparations to re issue the “drachma“. If this is true, I would say the decision to leave the EU has already been made except for the formalities! The next question is the biggie, and one which will affect the entire world. How do the markets and financial systems react to this?