Why one should sell the euro if Greece stays in the EU: There is no permanent solution seen in any deal which will be arrived at: whatever is scripted is a temporary financial lifeline €7.2bn in rescue loans for the technically insolvent Greece. It owes €1.5 billion to IMF and€5.2 billion in short term debt by June. By July it owes €5.95 billion; in August €4.38 billion to various creditors including IMF.[1]
Hence, in the short run, any bailout is a temporary liquidity measure helping the lenders but adding to the miseries of Greeks. Greece would need another bailout sooner than later. It cannot access international bond markets. Options are to seek out the creditors. Conditionality clauses will be tough. Austerity measures have not worked earlier. So one is likely to see even more tough economic stipulations in exchange for the rescue package. Economic overhauls will aggravate the agony rather than abate it.
Why one should sell the euro if Greece exits:
This is going to challenge the EU to its foundations. There are knock on effects possible and with UK just waiting toquit, the disintegration of the economic union might just about happen. Politicians would be wary of new treaties and agreements. Local constituencies would be emboldened by the Greek decoupling. Greek engine might run faster and signal others to free themselves.
Sell the euro all the way down until Friday?
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