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Day 1 – Nai or Oxi

Published Tuesday, June 30th, 2015

Today is significant for three reasons. It marks the end of the second Greek bailout programme which it had been expected would be rolled over or replaced by a third version. It marks the day when Greece is supposed to pay back €1.6 billion to the IMF and it is the deadline date by which a nuclear agreement with Iran has to be reached.

The bailout programme will not be rolled over or replaced, the IMF will not be repaid and there will not be an agreement on Iran’s nuclear programme. That is three out of three failures. Instead we have effectively an in/out referendum, a technical default that will be labelled arrears and brinkmanship at play in the Iranian talks. In these circumstances yesterday’s market reactions were relatively calm. Perhaps there is only so much bad news you can take at a time before a sort of decision-making paralysis sets in.

Without a significant amount of debt forgiveness there is no hope for Greece. If the vote is Yes, and it is not followed by something that is or sounds like debt forgiveness, the country will face years of misery and discontent. If it votes No it faces a year of agony but at least there is hope beyond that. If Angela Merkel is telling the truth and there will be no further concessions whatever happens then the Greeks should vote No.

Yesterday Jean-Claude Joker told Greeks that he loves them but “you mustn’t commit suicide because you are afraid of death. You must vote Yes, independently of the question asked”. That sounds like a warning that staying in the euro may lead to death but there is a small chance it may not occur if you continue the treatment that may be killing you. If Greeks vote Yes and the government stands down perhaps Greece will be offered a better package involving debt forgiveness which could be interpreted as the eurozone supporting regime change. In such an event Tsipras and Varoufakis will have delivered what they promised but would have to sacrifice their current political careers in the process, returning as heroes in due course.

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Posted by David Hufton