Greece was supposed to leave the Eurozone on 1.1.2013, according to pundits last year.
Citigroup’s Michael Saunders said Greece’s new currency would fall in value immediately by 60 per cent – and unleash a massive, yet manageable, wave of contagion across Europe.
In a note to clients, he said the likelihood of Greece leaving the euro in the next 12 to 24 months was now between 50 to 75 per cent – and assumed there would be a ‘Grexit’ at the start of next year.
The firm based its case on the belief that Greece would fail to form a government capable of implementing austerity measures after its next set of elections on June 17.
This would ‘accentuate’ the stalemate between the nation and its creditors.
Mr Saunders said: ‘We assume Grexit occurs on January 1, 2013, with Greece staying in the EU and receiving external loan support [to mitigate risks of social unrest and collapse of civil society].
‘We expect that Grexit will be followed by a series of policy responses aiming to prevent a domino-style collapse of the banking system and escalating economic disruption.’
Angela Merkel was (is) right. Well, mostly.
Further speculations below.