Will Greece Be Ejected from the EU?

(As usual, I am looking for the objective observation. This is not a prescription for what I think should happen, it is observation of what is likely to happen. Failing to stay objective is a mistake that costs money.)

Voters in Greece are rejecting austerity. The newly-elected government failed to coalesce this week, so there will be new elections in June. Predictions are that more seats will go to left-leaning parties which will, of course, deliver policies requested by the Greek people.

Greece would like to remain within the euro zone. It benefits from the stability of the Euro. By comparison, returning to the drachma would likely result in inflation, and most Greeks believe that returning to the drachma would be a disaster.

If you are a Greek citizen, why would you vote for austerity? It causes a loss of Government jobs. And why would you vote to lose the Euro and switch to the drachma? You wouldn't. That would result in inflation. If you were in their shoes, you too would want to have your cake and eat it.

Therefore, Greece will ask the euro zone countries to continue supplying money while it suspends interest payments. Voters in other countries will reject this scenario. They will reject the additional taxes required to maintain this state, by voting out politicians if necessary. The politicians in these other countries will then need to make a choice:  Leave the euro zone themselves, or request that the EU act as a unit to prevent Greece from using the Euro. This will lead to the EU pushing Greece out.

Germany will get 99% of the blame, even if the vote to expel is unanimous.

Stocks in U.S. markets are in a correction at present in anticipation of these events. The greatest part of the discount is from uncertainty over the method of Greece's exit and the ramifications for the rest of the euro zone. I have no way of calculating the correct discount. The greatest turbulence and discount in prices of stocks will be now, when there is a lot of uncertainty. Once the news of the separation occurs, stocks will rise as uncertainty recedes.

It has already been reported by various news services that banks in Greece have been preparing for several years for a possible return to the drachma. Greece's central bank owns the necessary printing presses for printing new drachmas, if it has to.

Over the past week Greeks have pulled nearly a trillion Euros from banks in Greece. This is capital flight, a run on the banks, confirming that the common expectation among voters themselves is that Greece will be departing from the euro zone.