I write this column overlooking the world's best performing stock exchange, Shenzhen. Located in southern China, the Shenzhen Stock Exchange's composite index is up over 120 percent this year, dwarfing all others by comparison. Shenzhen is on track to overtake Tokyo in terms of market capitalization this year. It follows only the New York, NASDAQ, Shanghai, and the Tokyo stock exchanges as the world largest. Thus, no setting may be more fitting, in its juxtaposition, to be thinking of the gloom and doom of the Greek financial crisis, than this one.
Turkey's largest trading partner, Europe, is of particular importance to Ankara. With fates intertwined, Turkey will, in the short-term, go the way of Europe, whatever that way ends up being. This is why it is important for Turkey to understand Greece. Ironically, however, the Greek crisis has nothing to do with Greece. Other than the Greeks, all the parties involved - its fellow eurozone members, the European Central Bank (ECB), the International Monetary Fund (IMF), and the European Union really don't care about Greece. As a miniscule part of the European financial system, Greece only matters as a litmus test for what's around the corner for the eurozone and broader EU. Today is especially poignant because after weeks of make-or-break," "last chance for a deal" and my very own, "final chapter in a Greek tragedy" type newspaper columns, this last week is THE end. Greece cannot pay its debts maturing at the end of the month.
Monday's "Greek Summit" will again be the final chance for Greece and its creditors to come to an agreement. It's difficult writing a column when the biggest story in finance this year will have broken immediately after this column has gone to press. So, consider this a message from the past. Hindsight is 20/20, and thus anything written on Monday night or Tuesday will have been in a post-Greek crisis world. So, here are some final thoughts as the clock ticks down.
By the time you read this article, one of two things will have happened: A deal will have been reached or Greece will be unable to repay its debts come next week. This will trigger a chain of events that will either unravel the eurozone in its current state, and ultimately the EU, or the parachute will deploy at the last second. With the election of David Cameron and more importantly, a strong showing by the UKIP party in the United Kingdom's election last month, the EU is in crisis mode as it is. The U.K. will vote later this year in a referendum on exiting the EU. A Greek default will only embolden the 13 percentage of UKIP voters guaranteed to vote for an exit. They will most likely join much of the 36 percent of Conservatives, who will also vote to leave the union. "Why should the U.K. stay in a union of failed states" will be the argument throughout the U.K. Tuesday should an agreement not be reached.
The socialist Syriza-led Greek government in charge of negotiating with the eurozone has made it clear that there is no more fat to be trimmed from government budgets without causing permanent damage. The German-led eurozone continues argue that continued austerity, as agreed to by previous Greek governments, is the only way forward. The eurozone's insistence appears to be more political theater than intention. There's no reason to question the intentions and motives of the Greek government; they ran on the anti-austerity platform and were elected to renegotiate with the eurozone. The eurozone members, however, are elected political figures with constituents - constituents uneasy about bailing anyone out, as they face the financial challenges of the "new normal" in Europe on their own.
The Germans, the greater eurozone and even the EU has much more to lose over a Greek default than Greece does. This may not be much comfort to the unemployed Greek government worker laid-off as part of austerity measures, but if greed is a motivator, the Greeks will find salvation. Politicians will need cover; the eurozone politicians will get their political cover in some sort of last-minute agreement in which Greek Prime Minister Alexis Tsipras will appear to be "strong-armed" into some sort of compromise. Signals of potential compromises have already been talked about early Monday as index futures and the euro both point to a deal. As you read this sentence, the sun will have risen over Mount Olympus, the Greeks will still use the euro, ATMs will still have cash and eurozone politicians will have their cover.