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If perhaps the broader markets have remained fairly stable after the election of

syriza, this is certainly not the same for people investing in Greece itself as the
yield on 3 year bonds have increased to almost 17 % and Greek bank shares are
down by 20 % and the broader stock market down 8 %.
There are two options which the Greeks now have the possibility of taking. On
the one hand they could default on their debt and thus leave the Eurozone and
maybe even the EU all together. This is becoming ever more unrealistic as in the
poll show before this is not what the Greeks want. Also recent developments
show that Greece is very unlikely to default on its payments. However, what
would happen if they were?
It would start with the process of the forcible conversion of euro deposits into
devalued drachma which would be similar to Argentinas corralito. It would be
devalued because few people are going to be willing to buy drachma, in fact
quite the opposite would happen. Most people would take their money out of the
banks. Especially rich people wanting to evade the higher taxes of the socialist
party. The cheap drachma would enable Greece to undercut its neighbours in
perhaps tourism. However, there is an issue many countries in the past have
displayed a pattern of high inflation leading to devaluation, and a competiveness
gain which is dissipated by inflation all over again. If Greece were to seriously go
it alone, without the 75 billion euros that Greek banks already depend on from
the ECB, it would need to balance its payments out, perhaps reduce its public
spending which is currently 59.3 % of GDP, the only other country that comes
close to this is Finland at 57.8 % although Finland is far more efficient and
prudent in its spending than Greece. These cuts are not what Syriza has
promised its voters. SO all in all this does not look too likely.
It is more likely, that Greece will seek a bridge loan. In fact tsipras said he would
keep all his pre-election policies such as raising the minimum wage. However, EU
officials have rejected his efforts to renegotiate Greeces bailout terms. The most
likely outcome is probably going to end hopefully with tsipras backing down from
this political standoff whilst still receiving some concessions on the debt of
Greece and on its budget surplus since The country's Syriza-led finance ministry
has proposed that Greeces 3pc of GDP primary surplus target for 2015 be
reduced to 1.49pc, and that Greek debt is reduced, according to the Greek daily
Kathimerini. Which is seen already as a step down from their previous hostile
demands. Personally I hope Greece does choose this option as otherwise a grexit
would lead to economic and political instability all over Europe.