Greece, not again?

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The European Central Bank has raised the prospect of Greece crashing out of the euro after it said financial buffers were sufficient to prevent contagion to other weak economies in the currency union. ECB president Mario Draghi said funds were sufficient to cope should Athens default on its debts, but warned that Europe would be entering “uncharted waters” that made the outcome of a default uncertain.

Fears grow of Greek euro exit after IMF meeting | World news | The Guardian

The following are potential scenarios, based on interviews with economists, investors and former policy makers:

Greek Officials Ponder Life Without the Euro - Bloomberg Business

U.S. President Barack Obama and European Central Bank President Mario Draghi both called on the Greek government to do more to resolve the standoff amid depleting cash reserves. Greek officials, including Deputy Prime Minister Yannis Dragasakis, stood their ground on measures such as cutting wages and pensions, adding new taxes or selling state assets. “We don’t budge from our red lines,” Dragasakis said in an interview published Sunday in the Athens-based To Vima newspaper.

Euro Area Seeks Greece Roadmap to May Agreement to Avoid Default - Bloomberg Business

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Euro-area officials at the IMF meeting said it’s not clear how long Greece has before it runs out of money. A default wouldn’t necessarily lead to an immediate Greek exit from the euro, three officials said. Instead, they said, it might trigger emergency measures like capital controls or a bank holiday, depending on which payments Greece missed and whether Greece would accept measures such as those used in Cyprus as a way to keep access to possible euro-area lifelines.

Euro Area Seeks Greece Roadmap to May Agreement to Avoid Default - Bloomberg Business

Were Greece to leave the euro, it would not have the same impact on the euro zone as it would have had two years ago, an ECB policymaker said on Monday, urging the Greek government to provide "numbers" to qualify for further aid.

ECB's Nowotny says impact of any Greek exit less now than before: TV | Reuters

Sure, it could happen. Greece could snub its lenders, run out of money, fail to secure additional funding and default on its debts. But the consequences wouldn’t be as horrific as many investors fear and jittery markets seem to anticipate. A Greek default, in fact, might be the very thing that speeds resolution of the whole Greek drama.

It’s time to stop worrying about Greece defaulting - Yahoo Finance

A Greek default would deepen the misery ordinary Greeks are enduring. But default wouldn’t necessarily force Greece to leave the euro zone and go back to its old currency, the drachma. Many press reports, in fact, treat default and a eurozone exit as synonymous. They’re not.

It’s time to stop worrying about Greece defaulting - Yahoo Finance

In the aftermath of default, Greece would be shut off from any further funding from the IMF, the European Central Bank or other such authorities. That’s why Greece, in theory, would have to exit the eurozone: It would have to start printing its own currency. But something else is much more likely to happen: The Syriza-led government would collapse, forcing the election of a new coalition. And a new government would probably be more willing to accept bailout conditions, returning Greece to the status quo and solidifying its place in the eurozone.

It’s time to stop worrying about Greece defaulting - Yahoo Finance

Greece probably has until late July to come to an agreement with its creditors. Possible delays in payments to the International Monetary Fund shouldn’t prompt the European Central Bank to shut off vital liquidity to Greek banks. By contrast, a default on marketable debt, specifically the failure of the Greek government to pay 3.5 billion euros due to the ECB on July 20, would probably force the central bank’s hand. The Greek government and its creditors are still likely to reach a deal on a list of reforms before that crucial date.

Why the Real Deadline for Greece Is July 20 - Bloomberg Business

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German Finance Minister Wolfgang Schaeuble hinted on Saturday that Berlin was preparing for a possible Greek default, drawing a parallel with the secrecy of German reunification plans in 1989. At a briefing with reporters after a tense meeting of euro zone finance ministers on Greece on Friday, Schaeuble was asked if euro zone finance ministers were working on a "Plan B" in case negotiations on funding with cash-strapped Athens fail. "You shouldn't ask responsible politicians about alternatives," Schaeuble answered, adding one only need to use one's imagination to envisage what could happen.

Germany hints at preparations of a Plan B on Greece - Yahoo Finance

There's a new theory doing the rounds in the "Grexit or no Grexit" debate. Unlike the widely-held conjecture that a default would lead inexorably to Greece's ejection from the eurozone, analysts and economists now think there are a number of ways the debt-addled country can retain its membership of the euro while stiffing its international lenders.

Greece's grand plan: default and stay in the euro - Telegraph

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UBS' Donovan said any contagion from a Grexit would come from the banking system. He said that if Greece did leave the euro area, any money in Greek banks would be redenominated into a new currency, which would probably plunge in value, distressing depositors. Depositors in other countries may think their holdings are safe, since their country is not going to leave the euro zone--or they may decide to avoid any risk and withdraw their savings, Donovan said.

Greek contagion risks may be higher than you think

German Finance Minister Wolfgang Schaeuble hinted on Saturday that Berlin was preparing for a possible Greek default, drawing a parallel with the secrecy of German reunification plans in 1989. At a briefing with reporters after a tense meeting of euro zone finance ministers on Greece on Friday, Schaeuble was asked if euro zone finance ministers were working on a "Plan B" in case negotiations on funding with cash-strapped Athens fail. "You shouldn't ask responsible politicians about alternatives," Schaeuble answered, adding one only need to use one's imagination to envisage what could happen.

Germany hints at preparations of a Plan B on Greece - Yahoo Finance

There's a new theory doing the rounds in the "Grexit or no Grexit" debate. Unlike the widely-held conjecture that a default would lead inexorably to Greece's ejection from the eurozone, analysts and economists now think there are a number of ways the debt-addled country can retain its membership of the euro while stiffing its international lenders.

Greece's grand plan: default and stay in the euro - Telegraph

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When Yanis Varoufakis warned his fellow euro-area finance chiefs of the dangers of pushing his government in Athens too far, Peter Kazimir snapped. Kazimir, Slovakia’s finance minister, launched a volley of criticism at his Greek counterpart, releasing months of pent-up frustrations among the group at the political novice. They’d had enough of what they called the economics professor’s lecturing style and his failure to make good on his pledges.

The Rumble in Riga: How the EU Lost Patience With Varoufakis - Bloomberg Business

Greece, which owes €324 billion to the International Monetary Fund, the European Central Bank, and euro zone governments, faces a relentless debt payment schedule over the next few months. Little money has been coming into the country, however, and talks over the release of bailout funds are progressing slowly.

Greece’s Scary Calendar of Debt Payments Due - Bloomberg Business

Europe's political leaders and central bankers and Greek politicians agree on only one thing: if Greece goes down, they don't want their fingerprints on the murder weapon. If Athens runs out of cash and defaults in the coming weeks, as seems increasingly possible, no one wants to be accused of having pushed it over the edge or failed to try to save it.

If Greece falls, no one wants their prints on the murder weapon - Yahoo Finance

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The legal basis for the euro is the European Treaty, which supersedes national law. Greece would expose itself to years of potentially crippling litigation, with holders of claims in euros refusing to be repaid in any new Greek currency. Moreover, Greek people are likely to continue using the Euro in their daily transactions (after all, they have already withdrawn €100bn from the peak since the beginning of the crisis).

This is the horrific consequence of Greece leaving the Euro - Business Insider

Bank of America Merrill Lynch's analysts held a roundtable on the potential impact of a Greek exit from the euro. Though it is not what they seem to be expecting, they say it is now time to "start thinking what used to be unthinkable." Here are some of the highlights.

This is the horrific consequence of Greece leaving the Euro - Business Insider

He argues that while it's popular to blame the Greek government (which he says is partly justifiable) for the country's current issues, the main reason for the failure of the Greek program over the past five years can be traced back to May 2010. Back then, the German government forced an "unworkable" program on Greece to protect banks from losses, Orphanides argued.

Who’s really to blame for the Greek crisis?

We now hear from the finance ministers that the Greek government is unreasonable because it does not want to accept these conditions. These are that austerity be fully implemented and that the structural reforms that have been agreed to by the previous Greek government, be fully carried out. But are these conditions reasonable?

Ivory Tower: Are creditors pushing Greece deliberately into default?

Greek Prime Minister Alexis Tsipras on Monday reshuffled his team handling talks with European and IMF lenders, a move widely seen as an effort to relegate embattled Finance Minister Yanis Varoufakis to a less active role in negotiations.

Greece moves to sideline Varoufakis after reform talks fiasco - Yahoo Finance

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The relationship between the government of Greece and the rest of the eurozone increasingly resembles a bad marriage. The two sides are sick of the sight of each other. Mutual trust has broken down. Efforts to patch things up continue, but nothing seems to work.

Grexit may be the best end for a bad marriage - FT.com

But in the event, regulators missed a trick: what sparked market turmoil when Lehman failed was not the credit derivatives contracts, but a legal issue that had previously been ignored, namely that the UK bankruptcy code ringfenced investor assets differently from New York’s.

US fears a European sequel to Lehman Brothers - FT.com

Greece’s new line of argument focuses on what it says are divisions among the international creditors. The IMF won’t compromise on labor deregulation and pension reforms, while the European Commission is insisting on fiscal targets being met, said the government official, who spoke on condition of anonymity because the talks are confidential. The commission is also refusing to consider a debt writedown, he said.

Greece Attacks Creditors as ECB Considers Next Step - Bloomberg Business

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The International Monetary Fund has warned Greece’s eurozone creditors that it is so far off course on its $172bn bailout programme that it risks losing vital IMF support unless lenders write off significant amounts of sovereign debt. (FT) The warning raises the prospect of the fund withholding some of the EUR7.2bn of bailout aid that Greece is desperately attempting to secure to avoid bankruptcy.

FirstFT (the new 6am Cut) | FT Alphaville

Greece has experienced an improved terms of trade over the last few years. But there is no sign of it translating into the sort of robust export growth, or business sector investment, that might enable the external sector to begin to pick up the huge slack in Greece’s economy. Whether that is because firms just aren’t competitive or because of rising uncertainty (or some combination of the two, as seems more likely) isn’t immediately clear. But note that these data go up only to 2014q4 – this was what things were looking like under the previous government and the old programme (for all its limitations). Any uncertainty has only become greater since then.

Greece: not exporting its way out of trouble | croaking cassandra

The eurozone's position on the Greek debt negotiations has not changed, and Athens must commit to its current bailout program before any debt relief can be considered, the head of the Eurogroup said on Friday.

The eurozone's position on Greek debt has not changed - Business Insider

The other economists who get a look in during these negotiations are at the IMF. Their position has always been problematic. It was they, partly through an inexplicable under estimation of the fiscal multiplier, who allowed the Troika to trash the Greek economy with austerity on an epic scale. They also foolishly allowed the rest of the Troika to believe that partial rather than full default would allow Greece to regain solvency. (For the details, see this short guide.) However, unlike their Troika colleagues, the IMF can admit and learn from its mistakes, rather than trying to cover them up. It is now reported to be telling the Eurozone finance ministers that they must write off more of Greece’s debt before the Fund will release more money.

mainly macro: The IMF, Greece and economic reality

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The International Monetary Fund is working with national authorities in southeastern Europe on contingency plans for a Greek default, a senior fund official said—a rare public admission that regulators are preparing for the potential failure to agree on continued aid for Athens.

IMF Works With Bank Regulators on Contingency Plans for Greek Default - WSJ

“Their argument, which says ‘we can’t pay, what the heck are you telling us to do?’ gets to be more powerful by the day,” David Blanchflower, a former member of the Bank of England’s monetary policy committee, said in a television interview Wednesday. “It’s not even so much now a question of won’t pay -- they can’t pay.”

EU’s Failing Debt Plans May Spur IMF Support for Greece - Bloomberg Business

German Chancellor Angela Merkel is coming under growing pressure from within the ranks of her own party bloc to give up on Greece for the sake of the euro.

Merkel Pressed to Give Up Greece as Germans Urge Strong Euro - Bloomberg Business

As will other big U.S. companies. Non-financial American firms hold $1.73 trillion in cash, 4 percent more than they had a year ago, and $1.1 trillion of that belongs to the 50 biggest companies, according to a recent report from Moody's Investor Services. Apple, Microsoft, Google, Pfizer and Cisco have stockpiled $439 billion.

Apple Could Make Money by Bailing Out Greece - Bloomberg View

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Greece's anti-austerity government may think it's being squeezed by its international lenders but that could be nothing compared to the pressure it faces from the country's voters, experts warn. The left-wing Syriza-led government under Prime Minister Alexis Tsipras has said it would not rush into a referendum or snap election to secure public support for the unpalatable reforms it may need to introduce to secure more funds. But analysts say neither can be ruled out as Athens desperately tries to avert a bankruptcy.

This may be a greater risk for Greece than default

Greece‘s latest bailout repayment to the International Monetary Fund may turn out to be one of the debt-saddled nation’s least expensive payments ever. With its $840 million payment Tuesday, Athens bought itself more time to negotiate new bailout terms with its creditors without having to deplete the country’s piggy banks at home. It pulled off the feat largely by tapping an obscure pot of money: its currency reserves held at the IMF.

Shell Game? How Greece’s Latest IMF Repayment Cost Athens Very Little - Real Time Economics - WSJ

Leaked minutes from the IMF confirm that the country was badly treated and needed immediate relief to break out of a vicious circle, but the EMU powers have never acknowledged their shared blame for the debacle.

Greece's 'war cabinet' prepares to battle EU creditors as anger mounts - Telegraph

Greece’s anti-austerity government needs to raise at least three billion euros ($3.4 billion) through additional fiscal measures by the end of this year to meet the minimum budget targets acceptable by creditors, an official with knowledge of the discussions said.

Greece’s Creditors Said to Seek 3 Billion-Euro Budget Cuts - Bloomberg Business