Don't forget the eurozone: Citigroup peg probability of Grexit at 90%

ECB President says he'll do "whatever it takes" to save the euro.

Remember the eurocrisis? It didn't go away, we've just all been nicely distracted by bread and circuses. And while no-one was looking, it's been getting steadily worse.

A research note from Citigroup's chief economist, William Buiter, now puts the chance of a Greek exit from the eurozone at 90 per cent:

We now believe the probability that Greece will leave EMU in the next 12-18 months is about 90%, up from our previous 50-75% estimate, and believe the most likely date is in the next 2-3 quarters. As before, for the sake of argument, we assume that “Grexit” occurs on 1 January 2013, but we stress this is an assumption rather than a forecast of the precise date. Even with the Spanish bank bailout, we continue to expect that both Spain and Italy are likely to enter some form of Troika bailout for the sovereign by the end of 2012. . .

The EA 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.

The attention of the world has absolutely been elsewhere; while the mainstream press has moved on to the Olympics, the financial pages have been just as focused on the news from America. But just because there are more novel problems happening in other countries, doesn't mean that any of the underlying problems of the eurozone have been fixed.

Greece is still suffering debilitating capital flight, as people steadily transfer as much of their money to safe havens as possible. The banking systems of the periphery countries – now closer to PIICS than PIIGS, as Greece graduates to a class of its own and Cyprus takes its place – are suffering under their own stresses, and the repeated bailouts push the structural problems underground for ever-shorter periods.

Mario Draghi, the ECB's President, has not be so distracted. At a press conference today, he announced the ECB would do "whatever it takes" to preserve the euro, adding "believe me, that will be enough". And enough it may be, for in the strange world of monetary policy, a committment to action is itself a form of action. If Draghi is believed – and that is a big if – then merely promising to do whatever it takes can be enough to end some of the capital flight and general unease which he has to tackle.

We will see whether expectations have been thus managed.

Mario Draghi, the head of the ECB. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

Show Hide image

It's Gary Lineker 1, the Sun 0

The football hero has found himself at the heart of a Twitter storm over the refugee children debate.

The Mole wonders what sort of topsy-turvy universe we now live in where Gary Lineker is suddenly being called a “political activist” by a Conservative MP? Our favourite big-eared football pundit has found himself in a war of words with the Sun newspaper after wading into the controversy over the age of the refugee children granted entry into Britain from Calais.

Pictures published earlier this week in the right-wing press prompted speculation over the migrants' “true age”, and a Tory MP even went as far as suggesting that these children should have their age verified by dental X-rays. All of which leaves your poor Mole with a deeply furrowed brow. But luckily the British Dental Association was on hand to condemn the idea as unethical, inaccurate and inappropriate. Phew. Thank God for dentists.

Back to old Big Ears, sorry, Saint Gary, who on Wednesday tweeted his outrage over the Murdoch-owned newspaper’s scaremongering coverage of the story. He smacked down the ex-English Defence League leader, Tommy Robinson, in a single tweet, calling him a “racist idiot”, and went on to defend his right to express his opinions freely on his feed.

The Sun hit back in traditional form, calling for Lineker to be ousted from his job as host of the BBC’s Match of the Day. The headline they chose? “Out on his ears”, of course, referring to the sporting hero’s most notable assets. In the article, the tabloid lays into Lineker, branding him a “leftie luvvie” and “jug-eared”. The article attacked him for describing those querying the age of the young migrants as “hideously racist” and suggested he had breached BBC guidelines on impartiality.

All of which has prompted calls for a boycott of the Sun and an outpouring of support for Lineker on Twitter. His fellow football hero Stan Collymore waded in, tweeting that he was on “Team Lineker”. Leading the charge against the Murdoch-owned title was the close ally of Labour leader Jeremy Corbyn and former Channel 4 News economics editor, Paul Mason, who tweeted:

Lineker, who is not accustomed to finding himself at the centre of such highly politicised arguments on social media, responded with typical good humour, saying he had received a bit of a “spanking”.

All of which leaves the Mole with renewed respect for Lineker and an uncharacteristic desire to watch this weekend’s Match of the Day to see if any trace of his new activist persona might surface.


I'm a mole, innit.