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    A bottle of vodka lemon Grexit is displayed on June 23, 2015

    Grexit: the 'Evil Genie' Let Out of the Bottle

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    A Grexit remains in the wings for Greece if it doesn’t fulfil the conditions of its third bailout agreement, according to the head of the European Stability Mechanism (ESM).

    "The threat as a possibility must always be there and is still there," Klaus Regling told a news conference in Berlin. In short, the numbers must add up.

    And those numbers, as follows, are the conditions set by the Troika for the Mediterranean country to remain in the currency union. 

    Greece must raise VAT to generate $334 million (€300 million) in 2015 and $1.78 billion (€1.6 billion) in 2016. A supplement added to income tax has also been included to raise $247 million (€220 million) at the end of this year.

    Corporations will be charged 12 percent on any profits above $562,000 (€500,000), while corporation tax will also rise three percent to 29 percent from 2016 to raise $460 million (€410 million).

    Pensioners will be restricted from early retirement, saving the government $66 million (€60 million) this year and $33.4 million (€30 million) in 2016. Increasing pension contributions will raise $390 million (€350 million) this year and $891 million (€800 million) next year.

    Higher health contributions from pensioners will also contribute $150million (€135 million) in 2015 and a further $568 million (€510 million) in 2016.

    If, and only if Greece manages to stick to these conditions, will the country remain in the currency union and receive $93 billion (€86 billion) in bailout money — there's no escaping on a magic carpet.

    ECB Rubbing the Bottle 

    During a talk in Paris, Benoît Cœuré, member of the Executive Board of the European Central Bank (ECB) addressed the impact of the Greek situation, adding that "the recent negotiations in Greece have let the evil genie of a country exiting the euro area (even temporarily) out of the bottle."

    "The genie will not be put back in its bottle once and for all until it is clear that such a risk will not rear its head again".

    And with the gap between political parties in Greece increasing and 53 members of the central committee resigning to join rebel left wing groups, Greece's economic destiny remains uncertain.     

    One such rebel group, Popular Unity, led by former energy minister Panagiotis Lafaznis has pledged to abolish the bailout program, cancel austerity plans, exit the Eurozone and bring in a new currency.

    “Greece is not for sale”, Lafaznis told reporters.

    Following the resignation of Prime Minister Alexis Tsipras after just seven months in the job, Greece’s president has appointed the head of the country’s Supreme Court as PM to lead a caretaker government. Elections are to be held next month.

     

    This certainly leaves the Grexit genie out of the bottle and loitering in the wings until political stability returns to Greece — the drama continues.

    Topic:
    Financial crisis in Greece (197)

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    Tags:
    Grexit, The European Central Bank (ECB), European Union, Alexis Tsipras, Greece
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