Greek Fire, Part 64

Looking back, I've been tracking the Greek Fire story now for two plus years, ever since February 2010.  Pretty much all the macro-level stuff has been spot on.  The time frame has been extended time and time again by the so called "Troika" of the International Monetary Fund, the European Central Bank, and the European Commission, but the structural changes necessary to fix the problem never appeared, and were only made worse by austerity measures.  Greece has gotten bailout after bailout, but it looks like this time the Troika may be about to cut Greece off.

Some 30 months later, we appear to have finally entered the endgame.

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So what happens now?  Greece's next big payment is due August 20.  If they don't have the money on hand, then default is the name of the game and we begin the Greek endgame in earnest.  Increasingly this default scenario is now looking like not just a distinct possibility, but the expected outcome.  Indeed, Germany is now openly talking about life after a Greek exit from the Euro.

Greece should start paying half of its pensions and state salaries in drachmas as part of a gradual exit from the euro zone, a leading German conservative was quoted on Monday as saying.

Alexander Dobrindt, general secretary of the Christian Social Union (CSU), the Bavaria-based sister party of Chancellor Angela Merkel's Christian Democrats (CDU), has long argued that Greece would be better off outside the euro zone.

"With Greece we have reached the end of the road. There must not be any further aid. A country which does not have the will to fulfil the conditions, or is not able to do so, must get a chance outside the euro," Dobrindt told the daily Die Welt.

German conservatives have said enough.  The Troika has all but pulled the plug.  All eyes are now on August 20th.  We'll see what transpires.