Get out the drachma! The chances of Greece staying in the Eurozone are now slim to none.
According to Reuters, economists at Citi, a New York-based bank, warned the chances of Greece leaving the euro in the next 12-18 months have risen to about 90 percent.
The bank, in a report dated July 25 but released in an email to investors on July 26, says Greece will most likely quit Europe’s single currency within the next two to three quarters.
Citi economists had previously put the chances of a Greek exit at 50 to 75 percent.
"We remain gloomy on the euro crisis," Citi economists said in the report, which was released three days after the German media reported the International Monetary Fund will stop bailing out Greece, a country teetering on the edge of bankruptcy.
"Over the next few years, the euro area end-game is likely to be a mix of EMU exit (Greece), a significant amount of sovereign debt and bank debt restructuring (Portugal, Ireland and, eventually, perhaps Italy, Spain and Cyprus) with only limited fiscal burden-sharing."
Citi said it expected Greece's exit from the euro coupled with economic weakness in the Eurozone's periphery to trigger further sovereign downgrades in the single-currency bloc in the next two to three quarters. It saw at least a one-notch downgrade by at least one major agency for Austria, Belgium, France, Germany, Greece, Ireland, Italy, the Netherlands, Portugal and Spain.
Outside the euro area, Citi expects both the U.S. and Japan to have their ratings cut by one-notch over the next two to three years. Also Britain may lose its triple-A rating over the same period due to economic weakness and fiscal slippage.