Greek Euro Exit

It is certain that Greece has plans to leave the euro but these will be marked ‘Top Secret’ and only shared with those who need to know. If the market knew that Greece was leaving, and the date of its departure, there would be a run on Greek banks and huge opportunities for the speculators. I have looked into my crystal ball and the logic points to the weekend 27-29 October.

 On the 28^th October 1940, the Italian ambassador in Greece, Emanuele Grazzi, demanded that Greece allow Axis forces to enter Greek territory and occupy certain unspecified strategic locations or otherwise face war. The Greek reply is said to have been a simple ‘Ohi’ meaning ‘No’ although the precise wording in the diplomatic language of the time was ‘Alors, c'est la guerre’ (Then it is war).

The Italians expected a quick war lasting no more than a few days but the Greeks fought back and it was not until the next year that the German forces entered the fight and finally succeeded in invading. The Greek’s bravery was recorded by Winston Churchill who declared that "Hence we will not say that Greeks fight like heroes, but that heroes fight like Greeks".

The 28^th October (Ohi Day) is now a public holiday in Greece and a day for the Greeks to be proud. This could also be the day of the Greek exit from the euro, not harping back to fighting against the Germans, although there are some interesting resonances with modern day Greece which the Greek popular press are likely to highlight. This day will be chosen because the Greek exit is long overdue and this next bank holiday weekend will allow time to make the changes whilst the Greek banking system is closed for business over the long weekend.

The report on Greek finances by the ‘troika' representing Greece's international lenders – the European Commission, European Central Bank and International Monetary Fund – was expected to be finished by the end of September, giving Eurozone finance ministers time to study it, and debate it at their meeting in Luxembourg today, but it has been delayed. It is my suspicion that reading between the lines of this report it will become clear that Greece will have to leave the euro. Rather than publish the report and allow the markets to reach this conclusion, it has been decided to leave the euro before the report comes out catching the markets by surprise and giving Greece a chance of pulling off this difficult and complex move.

At today’s meeting of finance ministers in Luxembourg there will be some around the table who know of the Top Secret plan but it will not be discussed and not shared with those outside the tight group of people who need to know.