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.

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Commons Confidential: Smith, selfies and pushy sons

All the best gossip from party conference, including why Dennis Skinner is now the MP for Selfie Central.

Owen Smith discovered the hard way at the Labour party conference in Liverpool that one moment you’re a contender and the next you’re a nobody. The party booked a luxurious suite at the plush Pullman Hotel for Candidate Smith before the leadership result. He was required to return the key card the day after Jeremy Corbyn’s second coming. On the upside, Smith no longer had to watch his defeat replayed endlessly on the apartment’s giant  flat-screen TV.

The Labour back-room boffin Patrick Heneghan, the party’s executive director of elections, had good cause to be startled when a TV crew pounced on him to demand an interview. The human submarine rarely surfaces in public and anonymity is his calling card. It turns out that the bespectacled Heneghan was mistaken for Owen Smith – a risky likeness when vengeful Corbynistas are on rampage. There’s no evidence of Smith being mistaken for Heneghan, though. Yet.

Members of Labour’s governing National Executive Committee are discovering new passions to pass the time during interminable meetings, as the Mods and the Corbs battle over each line of every decision. The shadow cabinet attack dog Jon “Sparkle” Ashworth, son of a casino croupier and a bunny girl, whiles away the hours by reading the poetry of Walt Whitman and W B Yeats on his iPad. Sparkle has learned that, to echo Whitman, to be with those he likes is enough.

I discovered Theresa May’s bit of rough – the grizzled Tory chairman, Patrick McLoughlin, a former Derbyshire coal miner – does his gardening in steel-toecapped wellies stamped “NCB” from his time down the pit thirty years ago. He’ll need his industrial footwear in Birmingham to kick around Tories revolting over grammar schools and Brexit.

Another ex-miner, Dennis Skinner, was the MP for Selfie Central in Liverpool, where a snap with the Beast of Bolsover was a popular memento. Alas, no cameras captured him in the Commons library demonstrating the contorted technique of speed-walkers. His father once inquired, “Why tha’ waddling tha’ bloody arse?” in Skinner’s younger days, when he’d top 7mph. Observers didn’t dare.

The Northern Poorhouse minister Andrew Percy moans that he’s been allocated a broom cupboard masquerading as an office in the old part of parliament. My snout claims that Precious Percy grumbled: “It’s so small, my human rights are violated.” Funny how the only “rights” many Tories shout about are their own.

The son of a very prominent Labour figure was caught trying to smuggle friends without passes into the secure conference zone in Liverpool. “Don’t you know who I am?” The cop didn’t, but he does now.

Kevin Maguire is the associate editor (politics) of the Daily Mirror

Kevin Maguire is Associate Editor (Politics) on the Daily Mirror and author of our Commons Confidential column on the high politics and low life in Westminster. An award-winning journalist, he is in frequent demand on television and radio and co-authored a book on great parliamentary scandals. He was formerly Chief Reporter on the Guardian and Labour Correspondent on the Daily Telegraph.

This article first appeared in the 29 September 2016 issue of the New Statesman, May’s new Tories