Greece Takes Downgrade by S&P, Sees 50% Exit of Euro


Greece is running out of friends. Standard & Poor’s does not like what it sees in this Grexit game of chicken and political shell game that Greece is playing with Europe. After word that Greece will not be making its debt payments to the International Monetary Fund on June 30, Standard & Poor’s has downgraded Greece.

Greece is seen being in commercial default on debt payments in general, with an exit of the euro is now 50%.

S&P said that its interpretation of Greece’s decision to hold a referendum on official creditor proposals as yet another indication that the government under Tsipras will continue to prioritize the nation’s domestic politics over real financial and economic stability, over commercial debt payments and over the eurozone membership.

S&P is lowering its long-term ratings to CCC- for Greece, down from CCC. S&P is further affirming the C short-term ratings. Greece was also put with a negative outlook, indicating that S&P could further downgrade Greece’s long-term ratings to SD over the next six months in the event of a distressed exchange or nonpayment of the nation’s commercial debt, including treasury bills.

S&P said:

In our view, the probability of Greece exiting the eurozone is now about 50%. … Also, we believe that, absent unanticipated favorable changes in Greece’s circumstances, a commercial default is inevitable within the next six months.

Again, how do you repossess national assets … or a country?

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Greece crisis: ‘Drachma is back team’ claim dismissed as ‘fantasy’ by TsiprasGreece-Crisis

An opposition lawmaker in Greece touched a nerve today when he told parliament the left-wing government had a team preparing the ground for a return to the drachma, a prospect many Greeks fear would bring chaos.

The government of Prime Minister Alexis Tsipras angrily dismissed the claim as “fantasy”.

But there are a growing number of warnings from Greece’s European partners that a ‘No’ vote in a referendum on Sunday on the terms of a bailout deal would lead to a Greek exit from Europe’s common currency.

“There’s already a team within the prime minister’s office, with staff from the general accounting office, right now working on the drachma,” Haris Theoharis of the centrist opposition party To Potami told the chamber.

“You have a plan to take us back to the drachma,” said Theoharis, who headed the government’s revenue service in a previous conservative-led coalition.

The claim adds to a climate of fear and uncertainty in Greece, where banks are closed for the week and Greeks have been rationed to cash withdrawals of 60 euros per day after the collapse of negotiations at the weekend on extending a bailout programme to keep the country liquid.

Tsipras said he would put the aid deal, which includes yet more austerity for a country going through one of the worst economic crises of modern times, to a popular plebiscite, and is urging a ‘No’ vote.

He insists rejection would not mean a Greek exit from the euro, but European leaders say the referendum amounts to ‘Yes’ or ‘No’ on whether to stay with the currency.

In parliament Deputy Labour Minister Dimitris Stratoulis accused Theoharis of trying to “terrorise” voters. A government spokesman said in a statement: “Apart from being a fantasy scenario, the statement of Mr Theoharis is the height of irresponsibility. Shame!”

Officials at the general accounting office could not immediately be reached for comment.

Poised to default on a 1.6 billion euro loan repayment to the International Monetary Fund on Tuesday, Athens faces running out of cash to pay pensions and wages without a new credit line.

Munich-based banknote printer Giesecke & Devrient said that, logistically, it would take over a year to produce a new currency. “As a rule, it takes at least one to one and a half years to set up a currency from scratch,” a spokeswoman said.

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