ET Now In an interview with ET Now, Mythili Bhusnurmath, Consulting Editor, ET Now shares her views on markets. Excerpts from the interview:
ET Now: Sitting here in India, how are you looking at the referendum and what does it mean for our markets? How will a 'yes' or 'no' vote affect us? Of course, with a yes vote, essentially there are the obvious inferences that one is drawing from either of the verdicts but could you kind of paint the big picture here?
Mythili Bhusnurmath: Well, actually as you said a lot will depend on the outcome because the Prime Minister is clearly telling his people not to vote in favour of the terms that is being set out by the Troika. So, one will have to see whether the Greek public goes with him or opts to stay on and whatever the concessions that are needed. Are the Greeks willing to concede? So, a lot really will depend on what the verdict finally is. However, either way I sense that the Troika will be the one to blink first for the simple reason that Greece has lost so much, they really do not have very much more to lose.
The Troika has much more to lose. A better future of the Euro is at stake. So, I think whatever the verdict is there will give rise to some short term upheavals. There will be some nervousness in the market but medium to longer term, the problems will ease out.
For India, the impact will be on short-term immediate capital flows. There might be a blip, there might be some scare but long-term to medium-term they will not be affected by what happens in Greece. So, one will have to wait and see what happens because this is really the first referendum in that matter on a country exiting the Euro.
We shall have to see what happens there. Finally, we shall have to see if Tsipras or the EU Troika blinks first. I feel it will be Troika. However, I could definitely be wrong.
ET Now: The first question that comes to my mind right now Mythili, is that what if there is a 'no' vote to the deal. Then will Greece come up with something overnight that works in favour of the public; a compromise that suits everybody?
Mythili Bhusnurmath: No, I think the referendum is really actually a victory for the Prime Minister because he is clearly trying to get his domestic constituency on board. So, regardless of whichever way the referendum goes, he will be able to turn around and say to his people, "Look I took you on board, so subsequently do not blame me."
So it is a very clever move on the part of Tsipras because as I said Greece has already lost so much, thanks to the IMF insisting on a rather absurd austerity programme. Whereas, the Troika and the EU have much much more to lose because the Greeks' exit may not be the only one. Then, you have will the EU bleeding. The Euro was anyway, already a fairly artificial construct. A monetary union without a fiscal union or rather political union. So, frankly both sides will compromise and my sense is that the Troika will compromise much more but as far the Prime Minister of Greece is concerned he has played a very smart game.
ET Now: Sitting here in India, how are you looking at the referendum and what does it mean for our markets? How will a 'yes' or 'no' vote affect us? Of course, with a yes vote, essentially there are the obvious inferences that one is drawing from either of the verdicts but could you kind of paint the big picture here?
Mythili Bhusnurmath: Well, actually as you said a lot will depend on the outcome because the Prime Minister is clearly telling his people not to vote in favour of the terms that is being set out by the Troika. So, one will have to see whether the Greek public goes with him or opts to stay on and whatever the concessions that are needed. Are the Greeks willing to concede? So, a lot really will depend on what the verdict finally is. However, either way I sense that the Troika will be the one to blink first for the simple reason that Greece has lost so much, they really do not have very much more to lose.
The Troika has much more to lose. A better future of the Euro is at stake. So, I think whatever the verdict is there will give rise to some short term upheavals. There will be some nervousness in the market but medium to longer term, the problems will ease out.
For India, the impact will be on short-term immediate capital flows. There might be a blip, there might be some scare but long-term to medium-term they will not be affected by what happens in Greece. So, one will have to wait and see what happens because this is really the first referendum in that matter on a country exiting the Euro.
We shall have to see what happens there. Finally, we shall have to see if Tsipras or the EU Troika blinks first. I feel it will be Troika. However, I could definitely be wrong.
ET Now: The first question that comes to my mind right now Mythili, is that what if there is a 'no' vote to the deal. Then will Greece come up with something overnight that works in favour of the public; a compromise that suits everybody?
Mythili Bhusnurmath: No, I think the referendum is really actually a victory for the Prime Minister because he is clearly trying to get his domestic constituency on board. So, regardless of whichever way the referendum goes, he will be able to turn around and say to his people, "Look I took you on board, so subsequently do not blame me."
So it is a very clever move on the part of Tsipras because as I said Greece has already lost so much, thanks to the IMF insisting on a rather absurd austerity programme. Whereas, the Troika and the EU have much much more to lose because the Greeks' exit may not be the only one. Then, you have will the EU bleeding. The Euro was anyway, already a fairly artificial construct. A monetary union without a fiscal union or rather political union. So, frankly both sides will compromise and my sense is that the Troika will compromise much more but as far the Prime Minister of Greece is concerned he has played a very smart game.
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