Greeks vote No. What events will get them to Yes?

We get the feeling that in Greece if you had money in the bank, you voted Yes to the Greek referendum.

For those that voted No, what will it take to get to Yes?

If the Greek Government can't reach a bailout deal soon, the Greek people will be facing missed pension payments, an end to vital imports (including pharmaceuticals, food etc), and more closed ATMs, layoffs and empty store shelves.  Its almost like dire consequences need to be staring everyone in the face before the Greek Government agrees to another round of austerity and reforms. Its easier to vote No when you have food in the cupboard and some cash in your mattress, but that can change quickly.     

While Greek PM Tsipras "won" a vote of confidence from the Greek people, the rest of the EU is under pressure from their own constituents to stick to Greek austerity and reform plans.

A parallel to the No vote could be drawn to the 2008 financial crisis with the US TARP vote.  The US House of Representatives voted against TARP in September 2008, only to reverse course and vote for TARP a few days later after US Equity markets fell sharply.

It seems like economic consequences will need to become more dire before the Greek Government is forced to embrace another round of EU bailouts, reform and austerity.

Sometimes you have to see the consequences of the first vote before you agree to a bailout.  

Here we go

Greece has implemented capital controls and scheduled a referendum for July 5th on the latest Troika proposal.  Not sure if this scenario was in the game theory for Greek Prime Minister Alexis Tsipras and Greek Finance Minister Yanis Varoufakis.

Some good summaries of the recent Greek events we have seen:

https://medium.com/bull-market/ecb-decision-likely-means-greek-banks-stay-closed-4e7754c30526

http://thereformedbroker.com/2015/06/28/some-stuff-you-should-know-about-greece-before-you-lose-your-s/

The best follow on Twitter for the minute by minute events in Greece and Europe is Peter Spiegel of the Financial Times.   

EU's negotiations with Greece's Syriza leadership also about Spain's Podemos

One reason the EU has to take a hard line with the Greek Syriza leadership's demands to renegotiate the Greek bailout package is the EU has to consider its next negotiation with a European Leadership that is making similar demands.  If the EU caves to Syriza, Spain's Podemos party may be encouraged to adopt a similar strategy of demanding a renegotiation of their bailout with the EU. 

Greece will still probably get some type of renegotiation, but the EU has to at least make it hard for Syriza or Podemos won't be far behind after Spanish elections later this year.  

Muted Market Reaction limits Greek leverage in negotiation with EU

The EU and Greece continue discussions to address Greece's demands to restructure its bailout terms and austerity program.  So far, the opening EU response to Greek demands has been "nein." "Nein" has been followed by haggling over the wording of non-binding joint statements.  Much to the chagrin of the Greek Leadership, World Market reaction has been quite muted to the slow moving "negotiations."  Even as world markets open on Friday the 13th, the headlines are far from frightening.  "Now They're Talking - Greece and Germany work toward a Compromise" is the Headline on bloomberg.com. The headline underneath says "Good Feels - Asian Stocks advance with Emerging Currencies."

As details of the EU-Greece meetings continue to leak, its clear that that EU Finance Ministers are sticking together to jointly demand that Greece continue to follow the original bailout program.  Greek Prime Minister Alexis Tsipras and Greek Finance Minister Yanis Varoufakis have continued to warn of dire consequences (both inside and outside of Greece) if Greece's bailout terms are not amended.  Despite these warnings, the EU can continue to play hardball with Greece while world markets continue to rise or stay at the same levels.

Recent bailouts in Europe and the US have been deeply unpopular, but they were able to pass due to extreme market volatility.  Plummeting stock prices in the US and rising sovereign bond rates in Europe forced leaders to vote for bailouts.  However, continued recent stability in world stock and bond markets aren't helping the Greek's to convince the EU that dire consequences are just around the corner.  Until world equity and credit markets make EU leaders pay for a hardline stance with Greece, "Nein" will be the title of this Greek Friday the 13th film. 

Good summary of Greek Euro crisis

The BBC has a great summary of the Greek Euro crisis and upcoming deadlines.

Euro Exodus concerns begin again

The Euro is the official currency of 19 Eurozone countries.  While 19 European countries share a common currency, they do not share a common fiscal policy.  Countries such as Greece, Portugal, Spain, Ireland and Italy have struggled with budget deficits, large total debt, and weak economic growth and competitiveness.  Before the Euro currency, these countries could devalue their currency to make their exports more competitive and make it easier to pay off a heavy debt burden with a devalued currency. 

Fast forward to February 2015 where Greece is the most cash strapped nation within the Euro currency.  Will Greece leave the Euro or will they reach a debt repayment compromise with the Troika (European Central Bank, European Commission and IMF that put together large bailout packages in recent years)?  Greece's new Prime Minister Alexis Tsipras has pledged the end of Troika mandated austerity in Greece after his left wing party Syriza won Greek elections in January 2015.

The game of chicken between the Greek government and the Troika has begun.  If Greece does not want to comply with the terms of its debt bailout will the Troika blink and acquiesce to Greek demands to keep Greece afloat and in the Euro?

How will Greece's Euro participation question impact world markets and does a possible "Grexit" begin a Euro Exodus?

 Euro Currency ready for more Greek tragedy?