Before there was Brexit, there was Grexit – it was short-hand for saying ‘the collapse of the euro was inevitable – and it would begin with Greece’. Now the bank that came up with the word Grexit has now dropped it.
Back in 2012, Citi's Chief Economist, Willem Buiter, came up with the word – meant to describe that point when Greece left, or was rejected from the euro, and maybe the EU. Mr Buiter even proposed a date when Grexit was likely to happen – January 1 2013.
The word Grexit became a metaphor; it stood for all that is inevitable about the failure of the EU, it was short-hand for the treatment of Greece by its backers – the infamous TROIKA – and was then adopted by the anti EU lobby, the likes of Lord Wolfson at Next, and Roger Bootle at Capital Economics. The Next boss even ran a competition to see who could come up with the optimal route for Grexit, and Mr Bootle won – winning a £250,000 prize in the process – nice work, if you can get it.
Then, of course, Lord Wolfson and Roger Bootle did something of a leap, they went from pro-Grexit to pro-Brexit.
As for Willem Buiter, he reckons that Brexit is the first domino, that it will be followed by the exit of other countries from the EU, and then the collapse of the EU itself.
So, that will be great, won’t it? Not at all re-creating the conditions that were dominant in Europe before World War 2.
But now, Citi has said that Grexit is so unlikely that it is dropping the word from its doom-saying lexicon.
Giada Giani, an economist at the bank said: "The political backdrop both in Greece and in Europe has become less conducive to very negative outcomes. . . We, therefore, remove from our baseline scenario our longstanding call for Greece leaving the euro area in the next one to three years”.
Next week, ‘why I love the EU’, by Nigel Farage to be followed, by “a Pink Floyd tribute song by fan Donald Trump entitled “Tear Down the Wall.”
Returning to Citi, it still thinks some kind of debt relief programme for Greece is likely, well to that, all one can say is that with global debt having risen by $57 trillion between 2007 and 2015, (according to McKinsey ) either explicit debt relief, or backdoor debt relief via negative interest rates is inevitable.