Greece Finds Some Cash

Even though we've been out of the blogosphere for a while, nothing has really changed in the drama between Greece and its creditors. Despite some last second posturing through Finance Minister Varoufakis being photographed with Russian President Putin, Greece really had no cards to play and miraculously found $450 million euro for a scheduled debt repayment to the IMF today. Answers: Greece blinked.

No good can come from extending this drama further.The longer the charade goes on, the more the politicians and their weary voters will come to feel that there is either (1) no real crisis and the drama has all been brought on by outsiders, so no need to change anything; or, (2) there is no hope for Greece except to be Europe's indebted beggar, and therefore no need to strive for growth or improvement. Neither reaction helps the nation in the long-term.

 Despite the dire consequences of a Greek exit from the euro currency, it can be handled and indeed we believe that were once contingency plans for doing just this.  27% plus unemployment rates for two years running, the uncertainty of meeting April government payrolls, the capital flight and the growing lame-duck feel to the current government all point to the benefits of Greece taking the bitter medicine and going it alone.

The euro itself will be less damaged that if the system were to countenance a "slow bailout" of Greece.

The Bank of England's recent Fiance Committee minutes show that UK banks' net exposure to Greece comprised less than 1% of the Common Equity Tier I (CET1) Capital, and bank counterparties as a whole had about a 2% exposure.  Were an exit to hit other heavily indebted countries in the eurozone, the exposure are significantly greater, but Greece itself can be ring-fenced by current capital cushions. JPMorgan Chase CEO Jamie Dimon has said that his bank has been working on a Greek exit for some time, through its risk management simulation exercises.

European stocks smugly reach new highs, while the ongoing complexion of the European experiment continues to look wan.