boxing.jpg Home Page News Page It was Greece's call for a referendum, and then the outcome, that increased the risk of a Greek exit from the monetary union. Many now assume that a Greek exit is the most likely scenario. The market has been hit with two blows over successive weekends. However, the pessimist impulses have begun giving way to a more cautious optimism that a Greek deal can be worked out to avoid an imminent Greek exit and a collapse of the banking system. The euro has found a bid and Italian and Spanish (10-year) premium over Germany has fallen. US Treasury yields have recovered from the earlier decline to 2.17%, the lowest level in a month. It was Greece's call for a referendum, and then the outcome, that increased the risk of a Greek exit from the monetary union. Many now assume that a Greek exit is the most likely scenario. We suspect that many misunderstand the incentive structure, and under-estimate the political will to ensure EMU remains irreversible. We argue that there a no pleasant choices left for both creditors and Greek people. read more
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