Google “Grexit” in Google’s popular news portal and you’ll get more than 1.2 million results in about a second of search time. That means that more than a million websites, news organizations and bloggers are citing the word “Grexit”— or “Greek Exit” from the Eurozone.
European officials are speaking about a Greek eviction from the Euro zone for the time, in public this week. Up to now, prime ministers and economists in charge of debt negotiations were adamant about Greece staying in the single currency. That’s all changed, given the breakdown in talks over the past week.
Financial markets, for months indifferent to wrangling over releasing billions of euros of aid for Greece, reacted with mounting alarm.
European stock markets hit their lowest level since February and the risk premium on bonds of other vulnerable euro zone states leapt in one of the sharpest episodes of contagion since the height of Europe’s debt crisis in 2012.
The media was also adding to the increased prospects. News organizations like Reuters claimed “Greek PM tears into lenders as euro zone prepares for ‘Grexit’”
A Forbes story claimed that a “Grexit Looms.”
Britain’s Telegraph carried the headline: “Greek banks are on their last legs. Grexit beckons”.
Even Greek and Greek American media carried the ominous warnings.
New York’s National Herald: More Investors Expect Grexit
The Greek News Network: A Grexit is a Comin’
Greek Naftemboriki: Αποδεκτό ένα Grexit αν η Ελλάδα δεν παρουσιάσει προτάσεις
The Austrian chancellor flew to Athens to warn Tsipras of the gravity of the situation and senior German lawmakers openly discussed the once-taboo prospect of a “Grexit” from the single currency area.
German Chancellor Angela Merkel, who has held repeated phone calls with Tsipras in recent weeks to press him to agree on reforms with EU/IMF negotiators, struck a despondent note, saying it was unclear if a deal could be found when euro zone finance ministers meet on Thursday in Luxembourg.
“Unfortunately, there is little new to report,” she told a news conference, repeating that Greece must meet its obligations. “I have always said I want to do everything possible to keep Greece in the euro zone. I remain dedicated to that.”
Greece is set to default on a 1.6 billion euro ($1.8 billion) debt repayment to the International Monetary Fund on June 30 unless it receives fresh funds by then, possibly driving it toward the exit of the euro zone.
Lawmakers in Merkel’s conservative party and her center-left coalition partners were more blunt than the chancellor in warning that a Greek euro zone exit was on the cards.
“In the event a solid reform package is not presented, then a ‘Grexit’ would have to be accepted if necessary,” said Michael Grosse-Broemer, a senior lawmaker in Merkel’s Christian Democrats. “I’m not so sure anymore if the Greek government is really interested in averting damage for the people of Greece.”
Finnish Prime Minister Juha Sipila, whose country is among the most hawkish creditors, said it would take “a miracle” to reach a solution next week, but that was still everyone’s aim.
European Commission Vice-President Valdis Dombrovskis said publicly that euro zone members were discussing what might happen if Greece failed to agree on a deal with lenders.
The bloc has no legal basis for forcing a country out, but Athens might end up with a de facto parallel currency, paving the way for a more formal exit from the euro.