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Waiting outside a bank in Athens, on July 6, 2015.
Waiting outside a bank in Athens, on July 6, 2015.
Giacomo Tognini

Amid all the talk of debt, defaults and deadlines, it is not easy to understand just what is actually going on in Greece. After yesterday's momentous referendum, we shine the spotlight on five key points to offer a way out not only for Greece and the Eurozone, but for the rest of us on information overload:

ALL EYES ON MARIO

Perhaps the single most crucial player right now is Mario Draghi, president of the European Central Bank (ECB), who was already on the phone early Monday with Greek Prime Minister Alexis Tsipras. Last week, following rampant withdrawals from Greek citizens seeking to protect their funds, the ECB limited emergency liquidity assistance (ELA) to Greek banks to 89 billion euros. The decision forced the Greek government to impose capital controls, and banks imposed a cap of one withdrawal of 60 euros per day for holders of Greek bank accounts.

Now that voters firmly rejected the austerity terms of the bailout agreement, Draghi must decide whether to continue providing funds to the Greek banking system — which is rapidly running out of money, with only around 1 billion euros left — or turn off the tap, causing a collapse of the Greek banking system. The failed banks would then appeal to the central government for help, but since Athens is already bankrupt as of last Tuesday, it would have to emit "IOUs" in lieu of actual euros, effectively creating a parallel currency. This would be a prelude to the formation of a "new drachma," as Greece has no ability to print euros unilaterally and the ECB's suspension of assistance would render the country devoid of cash.

Italian financial newspaper Il Sole 24 Ore reports that the ECB may offer a temporary loan while negotiations continue or use unspecified "new measures" to avert the impending economic catastrophe. So if the fate of Greece rests squarely in the hands of Draghi, are there clues to what he might do? He once famously declared he would do "whatever it takes" to save the euro. He also has been dubbed "Super Mario." To the rescue?

"VAROUFEXIT"

Greek Finance Minister Yanis Varoufakis announced his resignation early Monday morning despite being vindicated by the "No" victory in the referendum. In an effort to improve Athens' prospects for a quick deal with its European creditors, the quixotic former economics professor decided that the widespread aversion to him shared by many European leaders would be an obstacle in the coming days of negotiations. French newspaper Libération reports that Euclid Tsakalotos has been sworn in as his successor.

Tsakalotos is an Oxford-trained economist and was previously the deputy minister of foreign affairs. He is close to Varoufakis both personally and in economic thinking, but has a reputation as a calmer negotiator. The outgoing minister endorsed Tsakalotos for the post.

DEFAULTS AND DEPRESSIONS

Last Tuesday Athens missed a payment of $1.7 billion to the International Monetary Fund (IMF), and has since been technically in default. Greece's GDP has contracted by 25% since 2008, which according to Il Sole 24 Ore is the worst recession for any advanced economy since World War II.

The next key date is July 20, the deadline for Greece to pay back 3.5 billion euros owed to the ECB. With the government already effectively bankrupt and its banks perilously close to the same, some economists are urging a rapid "Grexit," which Nobel laureate and New York Times columnist Paul Krugman writes would allow Greece to establish a new currency — the drachma — and let it strongly devalue, a move that helped both Argentina and Iceland recover from economic collapse in 2002 and 2009, respectively.

An alternative proposed by the Greek government is to stay in the Eurozone but obtain the cancelation of a large portion of Greek debt, though this has been widely rejected by European leaders after the 2012 bailout by the so-called "Troika" of the IMF, European Commission and European Central Bank moved virtually all of the country's debt from private to public hands. Given this reluctance, French daily Le Monde reports German Economy Minister Sigmar Gabriel saying that a new bailout is "difficult to imagine."

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Geopolitics

AMLO Power Grab: Mexico's Electoral Reform Would Make Machiavelli Proud

Mexican President Andrés Manuel López Obrador, aka AMLO, says his plans to reform the electoral system are a way to save taxpayer money. A closer look tells a different story.

President Andres Manuel Lopez Obrador of Mexico votes

Luis Rubio

OpEd-

MEXICO CITY — For supporters of Mexico's President Andrés Manuel López Obrador (AMLO) the goal is clear: to keep power beyond the 2024 general election, at any price. Finally, the engineers of the much-touted Fourth Transformation, ALMO's 2018 campaign promise to do away with the privileged abuses that have plagued Mexican politics for decades, are showing their colors.

Current electoral laws date back to the 1990s, when unending electoral disputes were a constant of every voting round and impeded effective governance in numerous states and districts. The National Electoral Institute (INE) and its predecessor, the IFE, were created to solve once and for all those endemic disputes.

Their promoters hoped Mexico could expect a more honest future, with the electoral question resolved. The 2006 presidential elections, which included AMLO as a recalcitrant loser, showed this was hoping for too much. That election is also, remotely, at the source of the president's new electoral initiative.

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