JPMorgan Chase to Upgrade its ATM Facilities

JP Morgan ATMIt was announced recently that financial giant JPMorgan Chase is getting geared up to upgrade all of its ATMs in a bid to give consumers more choice and provide them with increased convenience. All of the cash machines owned and operated by Chase will receive the upgrade over the course of this year and it will be rolled out in two phases. Once completed, consumers who use the machines will be able to benefit in a variety of ways including the ability to use their smart phones in order to withdraw money from one of the machines.

The first phase of the upgrade process will take place during the earlier part of this year and this will enable consumers to receive a onetime PIN to their smart phone. This PIN can then be used in order to make cash withdrawals from Chase ATMs. However, this is just an interim measure until the second phase of the upgrades is implemented.

The second phase of the upgrade

In a recent statement, Michael Fusco who is a spokesperson for Chase, confirmed that the second phase of the upgrades would provide consumers with the ultimate in ease and simplicity when making withdrawals from an ATM. He said that once the second phase was complete, consumers would simply be able to tap their smart phone against the ATM screen in order to withdraw cash. The same sort of technology is already being used with other payment systems such as Apple Pay.

Fusco said that the technology would prove to be particularly useful for those who don’t like to carry around their debit card or who have forgotten to bring their card out with them. This is because no card will be required to make a withdrawal if the consumer is using the smart phone methods, which should be very quick and simple once it is in place. However, Fusco did also state that the new method of payment would not be replacing debit card withdrawals so consumers will still be able to withdraw cash using their card in the usual way.

The upgrades will provide a range of other benefits for customers to enjoy, which includes the ability to withdraw up to $3000 from ATMs that are located inside a branch. It will also be possible to withdraw specific amounts such as $43 rather than having to withdraw in multiples of $20.

Author Claims Bad Credit Loan Regulations Created to ‘Wipe Out Industrty’

Rules and RegulationIn places all over the world, particularly in the United States and the United Kingdom, public officials and bureaucrats are working to institute stringent regulations against the bad credit loan industry. Many of the reforms, either implemented or proposed, include capping interest rates, limiting the number of loans to just four and changing the way businesses collect payments.

The payday loan sector argues, however, that these regulations hurt the industry, and will inevitably cause unwanted harm against the very same people who use personal loans for people with bad credit. One expert, who is not affiliated with the payday loan niche, argues that today’s influx of regulatory reforms are designed to “wipe out the industry” and “limit consumer choice.”

“It’s no secret the government wants their share of the pie, in every niche not just the payday loan niche. They have no problem bullying their way in and trying to squeeze lenders out. Reforms could wipe out the industry but where would that leave us? How will the people who apply for these loans get money? This looks like a strategic move to put lenders under the governments thumb so they get their share said,” Sara Simple.

Victor Joecks, executive vice president of the Nevada Policy Research Institute, published an op-ed in the Las Vegas Review Journal, in which he presents the case that governments are looking to dismantle payday loan businesses and hurt consumers.

Joecks cited the Consumer Financial Protection Bureau (CFPB) and its proposal to impose “crushing new rules” on an industry which he feels is an “easy target.” Despite most borrowers taking out just one or two loans each year, Joecks says the CFPB would cap the number of bad credit loans consumers can take out. He also listed the cap on interest rates, something Joecks says helps the lenders offset default risk.

“The industry is an easy target. Critics have successfully portrayed its work as predatory. They say lenders exploit people in desperate financial straits and charge obscenely high interest rates. But the data don’t support this portrayal,” Joecks opined.

According to the author, half of one percent of all CFPB complaints were concerning payday loans. Payday lenders also rank high in customer satisfaction, citing a survey that found just six percent of payday borrowers were “very dissatisfied.”

“The truth is, payday loans provide a valuable service,” wrote Joecks.

“People with bad credit and inconsistent incomes usually can’t get loans from traditional banks. But they still have bills to pay. A payday loan can help fill that gap, giving people the quick cash they need to, say, pay this month’s electric bill or fill up the tank so they can drive their kids to school.”

He conceded that payday loans shouldn’t be an option for long-term financing. But they are useful in short-term emergencies, especially if a check bounces and then an enormous overdraft charge will be placed on a bank account. He noted a CFPB statistic that found a consumer who overdraws by $24 will face a fee of $34. “That’s the equivalent of a loan with an annual interest rate of 17,000 percent. By comparison, the typical payday loans charges around 400 percent.”

By prohibiting payday loans, low-income households will have to look for cash in much worse places, says Joecks.

In the end, Joecks believes the CFPB’s new bad credit loan initiative would hurt millions of consumers with a valuable alternative source of short-term funding. Moreover, it’s a “condescending intrusion” into consumer choice.

Joecks believes adult consumers should be permitted to handle the finances however they see fit. Remember, a consumer is never coerced into taking out a payday loan akin to how consumers aren’t forced to take out a new credit card. Joecks posits that these products are openly selected on the open market.

“American citizens shouldn’t be treated like children,” Joecks concluded. “If the Consumer Protection Financial Bureau actually wants to help people, it should scrap its proposal to limit payday lending.”

Reactions to the Op-Ed Piece

Not everyone was as supportive of the bad credit loan industry as Joecks is in this op-ed.

A quick glance at the comment section and there are plenty of comments lambasting the business. It should be noted, however, that there are just as many positive comments.
Here are a few of the negative comments:

“No they don’t serve a purpose. The industry preys upon the ignorant. We need to make finance 101 a requirement in schools to educate people on how to avoid getting taken by payday loans. One need only open an account at a a credit union to be eligible for a short term loan at a rate substantially lower than payday loans. If you get a paycheck, you can get a loan.”

“If any industry needs to be wiped out, the payday loan industry is it — until it gets a modicum of decency.”

“There is nothing more valuable to people who cannot afford to pay their bills than a 400% loan.”

Starbucks to Offer Delivery in a Few Cities

StarbucksThe Management of American Global Coffee Company and Coffeehouse chain, Starbucks, has decided it will be starting a delivery service in a few selected cities of the United States of America in the near future. This decision was taken after a disappointing third quarter performance in which the company failed to achieve the targets and expectations of investors despite a rise in revenue, which stood at $4.18 billion.

Starbucks at this moment of time has refused to release the full details about this new delivery service but they believe that if everything goes according to plan, the company might start the reversal of its fortunes very soon.

Starbucks CEO Howard Schultz believes that this move is an aggressive one which will allow the company to change and adjust with the changing global trends. As online shopping becomes more and more popular, Starbucks will look to cash in on this popular way of meetings its targets. This is the reason why Starbucks is actively campaigning to persuade customers to download its app, which will increase its customer loyalty as well.

The option to avail this new delivery service will begin from the beginning of next year when the app will be upgraded.

Starbucks is also planning to go ahead with an idea that allows customers to pre-order on their mobile phones so that they have their products ready when they enter the Starbucks outlet. This option will increase the speed at which people enter and leave the shop allowing potential customers to sit in a more comfortable and desirable environment.

People who decide to go to some other Coffee shops such as Dunkin Donuts due to Starbucks being too crowded during the rush hour might well rethink again about getting their products from Starbucks.

Starbucks is currently only starting its delivery service in the U.S because its sales in this particular region have gone down whereas in Americas and Asia, its revenue rose by about 5%. Starbucks needs to get its acts back on the track as it faces increasing competition from fast food chains that have started to offer the facility of Coffee to their customers. Starbucks will have to change its outlook and its services to compete with them. They have started off well by revamping their sandwiches and increasing its variety to boost sales in the afternoon.

In light of the Holiday Christmas season that is about to begin, it has introduced a seasonal Christmas drink, Chestnut Praline Latte, their first new holiday drink in five years. It is a strategy to take over the market with its favorites in the holiday season, a time where the consumer spending is at its peak and sales sky-rocket. In summers, Starbucks also released its Fizzio Soda Drinks which have quite not hit the mark and have performed below what was expected of them.

Company is trying new things and entering new areas; however it cannot be denied that these risks have to be taken in order to survive in a highly competitive market.

The Number of Payday Loans Have Decreased – Or Have They?

payday-loan-searchRecent data from Wisconsin indicates that the number of payday loans went down significantly after a bill for limiting lending practices was signed by the governor in 2010. In that year, 1.15 million payday loans were issued, adding up to a total value of $482 million. By 2012, the number of payday loans issued in Wisconsin had fallen to around 200,000 loans with a total value of $58 million. So does that indicate that the bill successfully curbed the predatory lending practices that the consumers were facing?

Sadly, the answer to that would be in the negative. These data figures in no way indicate that the rate of predatory lending fell, but merely the fact that payday lenders found a way around the law to carry on with their business. The loopholes in the bill are now being exploited by most of these companies to their advantage to keep themselves off the radar of state authorities while they continue to charge high interest rates from consumers.

The most important loophole that resulted in these data figures was the change in the definition of payday loans. Under the definition of the bill, only loans in which a post-dated check was provided or ability to carry out electronic funds transfer was provided to a creditor were considered to be payday loans. In 2011, this definition was changed, and payday loans were defined instead as loans that can only be issued for a time period of less than 90 days.

The bill also imposed restrictions on the number of loans a customer can be offered by a single company to repay their original debt and a cap on the total amount of loans that can be provided. While the bill did not put a cap on the initial interest rate, it did provided a cap of 2.75% interest on the outstanding amount of loan that is not paid by the consumer by the time it was due.
While the bill can be regarded as a good initiative, it left too many loopholes for the payday lenders to exploit.

A number of high-interest loans were simply not counted as payday loans anymore due to the changes in the definition, but they still existed in the market the same way as before. By making a few changes to the terms of loans they were offering, the payday lenders are successfully avoiding regulations while they continue with the regular predatory lending practices.

However, that doesn’t indicate that all payday lenders are operating the same way. There are still payday lending companies that are providing payday loans as described by this bill, following all the regulations that are imposed on them. These companies work towards building a network of responsible payday lending that can actually provide consumers from low-income communities the financial backing when needed.

Consumers looking for such payday lending companies can look for them with online service providers that match consumers with payday lenders in an effort to promote responsible lending. Typically consumers will run into two types of websites that offer payday loans. The first is an actual payday lender who offers loans directly. Someone would visit the direct lenders website complete an application and deal with that lender only. The second type of are payday loan websites who act as a matching service passing data to what is know as a “ping tree” which is then distributed to payday lenders. In this example the applicant could receive a loan from any number of lenders.

While financial regulators and payday lenders continue to battle it out, loans will be funded and high interest rates will be paid.

How to Score Cheaper Car Insurance

Car insuranceCar insurance is the law in many different countries; customers are likely to be given a lot of options in choosing. It is important to realize that not all offers are tailor-made to every individual, but sifting through different points and offers can help individuals focus on what their requirements are. Understanding one’s insurance options can help narrow down the choices, especially if one hires an agent to find the best offers for them.

With such a wide array of choices available, the customers might not be able to find the best option for them so it is vital that they read the descriptions available from various insurance coverage’s available. The difference between collision and comprehensive coverage must be understood, and other car insurance basics must be learned before settling with a particular option.
The process of getting a quote must be completed before an emergency situation arises, especially with new or young drivers. It is important to ensure that risk is always minimal in car insurance, thus choosing a publicly recommended insurance company is a good idea.

In many cases, it is a good idea to add a second driver to the policy. This is especially good if the driver is young, since having another driver adds responsibility. If the car is the customer’s own, they must ensure to never add someone else’s name as first driver.

If the customer has hired an insurance agent to fulfill their needs, it is important to communicate with them and inform them about any changes and special circumstances. Furthermore, the insurance agent is also better informed about the changes or hikes in policy rates, so being in contact with them is also good for customer’s car insurance. Some customers are prone to add extensions to their cars, but these are likely to interfere with car insurance policies. In order to make claims, there are very particular rules about extensions that might interfere with the driving.

There are multi-car policies that cater to people who own multiple cars, or have a family with separate cars for individuals. These are likely to cost less than separate insurance policies applied on cars, so utilizing them is an effective solution. For car insurers, posting car details on comparison websites can offer different perspectives on insurance offers currently in the market. Forums and websites can easily be reached by insurers to make their offer as well.

Car insurance requirements are likely to vary from one state to another, so being aware of the legal implications is necessary. A clean driving record must be kept to ensure a consistent car insurance policy, and records of financial responsibility as well as identification must be kept handy. The insurance history and financial restraints are likely to affect the policy rates for customers as well.

Additionally, it is important to compare the prices and service options available. This can be done by getting multiple quotes from a few different insurance companies. The pricing variances, amount of coverage, the benefits offered as well as claims services should be compared and examined to get the best deal. Moreover, customers should take advantage of discount offers from car insurance companies, because they are usually limited but are quite effective and beneficial to drivers in the long run.

Things to Know Before Signing with an Insurance Company

Insurance policyThe first thing to realize when shopping for an insurance policy is to be aware of one’s needs, and look for a package that is comparatively suitably priced from other companies. For example, certain individuals like to go for 24 hour claims services, while others are more comfortable with opting for a quota process face to face with the agent. Before signing up for an insurance company, individuals should hire a reliable agent so that a thorough background check can be performed on it. Insurance agents are also trusted advocates who can help in finding customers the right amount of coverage without trying to push any offers.

They will also be more aware of what the trends are within the insurance industry, and be able to steer customers out of harm’s way. The insurance company may have a shady history or too small a number of clients, but they will ever let it show to potential customers. Therefore, it is vital to hire an agent before making further decisions. Attributes that set apart reliable insurance companies from potential rip-offs are their strength and stability in handling claims.

Sincerity and a clean history is also an important feature to check before deciding on a firm, especially in current economic environment. Before bounding to a company, a rating service should be consulted as well. Although there are skeptics who believe rating agencies are only based on personal opinions, they are, in fact, based on statistical readings on how many customers are satisfied with the policies and premium rates of different insurance companies.

Additionally, they take stock of the number of complaints lodged against certain companies and allow potential customers to compare them. One of the most vital aspects of research in choosing insurance companies is to make sure it’s an admitted firm. This means that employers and employees are all licensed professionals. Also, all admitted carriers are obligated to follow the guidelines set up by the Department of Insurance, and any deviation can cost them their jobs. Admitted companies are monitored by states as a guaranteed insurance program, and are insured themselves in case of insolvency.

Customers who have filed their claims with the agency will have their claim paid in case of liquidation. As opposed to this, non-admitted carriers are under no state obligations, which make it easier for them to rip off clients and disappear. However, some customers aim to sign up with them because they consider non-admitted carriers as typically willing to take on higher risks than their counterparts. Large corporations have been known to sign up with non-admitted insurers in the past, and while some have experienced failure, others have done quite well through risky business transactions.

As can be seen, there are significant terms and conditions customers must go through before signing up for a quota process. Since insurance is a long term investment, customers should be aware of what they’re paying for and dictate the terms of the partnership they have with their insurance agent.

The Importance of Customer Communication

insurance-communicationSince there are now so many different options available for customers to choose from, insurance companies are now finding it harder than ever to utilize their communication strategies to reel them in. With the current economic environment, premium rates are constantly escalating as well which contributes to the communication problems. The policy makers in insurance companies must realize that highlighting different features of their coverage plans can have a stronger effect on customers than trying to hard sell their premium rates in bulk.

Customers are often looking for particular rates to suit their needs when they decide to apply for insurance, thus an insurance firm should learn to cater to that instead of trying to make a sale. Insurance is now considered a commodity, and customers see it as offering little differentiation apart from the price, so their only need is to find the right quota. If they do not find it at one firm they will move on to another.

The importance of communication can signify how customers can be inspired to stick with your company, given that you deliver a unique selling point to them as well as a suitable price and net-worth clients. If the communication processes within a firm are streamlined, there is more of a chance that customer value is added and they are able to differentiate between one particular firm’s products and services as opposed to the next. A good communications strategy can also help in increasing customer loyalty and give customers a reason to return to a particular company with references. Not only this, it can add value to current customer communications applications.

Since a lot of the customer information kept within record at insurance companies is of a very personal nature, a certain level of trust must be achieved between customer and insurance agent. Customer service representatives are often notorious for hard-selling products, but with customers who are have established a relationship with an insurance firm, a level of professionalism and dignity must be achieved in selling products. Any questions customers have about the premium rates or changes in policies must be patiently answered.

Communication must be clear and direct, any legalities or sensitive details about insurance on customers possessions must be talked through face to face, so customers can fully comprehend the implications in recovering royalties from damage. Even if a customer’s claim cannot be processed, the reasons should be explained with strong justification and calmness. If a customer is resisting the denial of the insurance claim, they must be given time to consider their opinion with all the information at their disposal.

Customer communication is important to retain a working relationship with customers. With so many options available to them, they can easily apply to another firm if they find one firm is unable to meet their requirements. Insurance representatives must be trained professionals in dealing with loyal customers. Discounts and benefits that customers are entitled to must be communicated to them honestly. If sales teams at insurance firms are able to fully comprehend how far a good communications strategy can take them, they can surely go a long way.

Insurance Companies vs. Insurance Agents

insuranceThere have been countless incidents where customers have gone through with their decision to go with either an insurance company or an insurance agent without being aware of the difference between the two. This lack of an informed decision may mean the insurance policy purchased is possibly unsuitable.

There are some fundamental differences between insurance agencies and companies. For starters, insurance agencies are independent, and are locally owned. Insurance companies set standard pricing and prepare specific guidelines for their claims procedures; but with insurance agencies, the offers are tailor-made to suit customer’s needs, and pricing and procedures are also easily changed and molded.

Insurance agencies also represent insurance companies when need be, and sell as well as service the insurance policies to customers. Insurance agencies can represent and advise a customer if a claim is made for the first time, and also offer assistance in communicating customer’s requirements with insurance companies.

The pricing, coverage and service standards can be interchangeable and serviceable as per each customer’s needs; it is usually recommended that insurance agents be hired before making a claim. Insurance companies are known for establishing their own rates, rules and regulations, whenever a customer signs up with them. The difference between agents and companies, therefore, is that the latter may not be able to fulfill customer’s demands as thoroughly or communicate customer needs as comprehensively.

Insurance agents act as trusted advocates to customers and are given the time to fully comprehend the situation and advise a suitable claim and come up with adequate procedures. With time the agents may become reliable and trusted advisers to customers and start to work on their behalf in order to match up the needs of customers with clients.

Insurance companies usually sell policies directly to consumers, but some of their products are sold through independent insurance agencies so that customers who are in need of something particular are directed to them. Insurance companies only offer products at particular prices that are standardized. Also, they don’t usually offer to go the extra mile as agents might; for example, with car insurance companies the insurance agents will offer to go to the registry of motor vehicles to pick up new plates, or will be there to back up the customers claim at claim time.

The insurance companies are only available for particular business functions. Furthermore, if there is a hike in insurance policy rates, the insurance companies cannot help customers in saving money. The most they are able to do is cut the customers coverage, but with insurance agents there are varied choices to suit customer requirements. Agents can be hired to look for policy rates that are lower, as well as shop for rates that might be more suitable to the kind of claim the customer wants to make.

The best coverage can be shopped for with the help of agents, especially since they are likely to be more informed about what the current market is offering. Customers can fully communicate with and trust their insurance agents, while the most insurance companies will only allow customers to talk with sales representatives. These are likely to only highlight the parts of the product they want to sell, and will not inform customers of aspects that may not be beneficial.

The Down Side of Co-Signing a Loan

Business handshake after contract signatureOver the last week I’ve heard quite a few stories from people that have been burned on a co-signed loan, and had their credit score completely destroyed through the actions of another. Worse yet, in most of these situations, the person didn’t even know that a debt they had co-signed on had been neglected.

This means that they didn’t even realize that their credit score was being wrecked while it was happening. Essentially, they didn’t even have a chance to defend their good reputation as a borrower. Inspired by these true stories, I want to use this article to describe the full implications of co-signing on a loan, and how it is that we can keep track of debts with our names on them.

The most important thing to remember when co-signing for loans is that this debt will belong to both the primary applicant and the co-signer throughout its term. No matter what sort of agreement is made between the two parties, a co-signer is explicitly agreeing to take responsibility for the liability in question in the event that the primary applicant fails to meet the application.

This means that every late payment, delinquency, and submission to collections goes on both credit bureaus in real time. What’s more, there is no warning mechanism for the co-signer to rely on to see that the co-signer is not making payments. It is up to the co-signer to ensure that the payments are being made by the primary borrower, and to essentially protect their own credit score.

Understanding just how much our credit score is at risk whenever we co-sign for a loan application, we are in a position to begin establishing some ground rules for determining when and how to co-sign for a friend or family member’s loan. Firstly, we need to determine what kinds of applications we want to support. As a general rule, it is safest to support only those applicants with a strong income, but need to leverage your credit score or net worth.

Because a strong income can improve net worth by paying off debts, and credit score by supporting the borrower’s ability to make payments, the primary applicant is more likely to keep your credit score intact than if they were not financially able to meet the obligation in the first place. What’s more, because of the way in which a co-signature supports the application, it will re-enforce the primary’s ability to make repayments in that it will likely reduce the interest rate that is qualified for, and therefore reduce the payment obligation all together.

The second set of measures to take when co-signing for a loan application is to make sure that you have a way of verifying that the debt is being serviced in a timely manner. The best way to do this is to have the primary applicant provide you with some sort of verification that payments are being made every month. This can be as simple as taking a screenshot of the confirmation codes for each payment that is being made from online banking.

Alternatively, we may insist that a pre-authorized payment plan be set up to ensure that the payments are on time. If we wanted to be particularly hands-on, we could even insist that the debt be paid out from a joint account, which would allow you the ability to jump in and make a payment at the last minute, should things start heading south.

Regardless of how it is that we choose to defend our credit scores, it is important to remember that the most critical part of an applicant’s ability to pay off their obligations comes from their personal character. There’s no point in co-signing for a debt that we know is attached to an unreliable person.

When Will the US Dollar Rebound?

Sagging EconomyHaving watched the US Dollar decline dramatically over the last few years, the nation’s purchasing power as a whole has been reaching extremely low levels. However, as the bottom of the drop seems to still be nowhere in sight, economists are continuing to predict a return to value over the next few years.

Mainly as a product of the continuing escalation of the European crisis, combined with the continuing recovery of the US economy, investors and savers are both confident in the eventual return of the USD as a valuable currency in the world market. Unfortunately, without any real indication of exactly how long the wait will be, frustrated savers across the country have been collectively asking about just how long the wait for the rebound will be.

The first key turning point for the USD that investors are waiting on is the full recovery of the American economy. While companies themselves continue to perform at reasonable levels, the lack of employment continues to plague the nation. Without people working in gainful employment with reasonable consistency, it is impossible for the currency to fully recover, because of the way in which it serves as an indicator of the nation’s ability to produce wealth.

By returning to its status as a wealth-producing nation, the USA can expect to see an increase in its currency value. Specifically, this growth will likely stem from increased purchasing from internal investors, due to the preference to invest in familiar assets.

The second main contingency that the USD is waiting on is the outcomes of the European crisis, with the resolution of the Greek situation being of particular note. Because of the way in which the Euro-zone is still in a state of uncertainty, as opposed to a full blown state of collapse, investors are still holding on to their assets in the hopes of a resolution.

However, as the risk of collapse continues to escalate, it is reasonable to assume that a capital flight will take place, resulting in funds leaving the Euro-zone in favor of more stable currencies. In the event that this flight should take place, the USD is generally expected to appreciate as a stable-alternative. Given that the USD is fairly removed from Europe both politically and economically, the rationality does hold as reasonable.

With both the Greek and US economies demonstrating significant amounts of influence over the value of the USD, it is finally important to remember how it is that gold has been acting as a currency of last resort globally. Because of the way in which gold has appreciated in worth over the last few years, investors need to remember that there is always the possibility of an exit from the gold currency resulting in a re-inflation of the value of the USD, as the main currency alternative to gold.

Evaluating the “Grexit” as an Economic trend

grexitAs the European crisis continues to escalate the amount of political uncertainty that is moving today’s markets, it is interesting to notice how issues that were once seemingly resolved tend to return to haunt the market as often as possible. Most recently, the re-emergence of Greek risk has lead to another near-melt-down in the market, as the country’s upcoming election has the ability to determine the country’s strategy for tackling its overwhelming debt.

More importantly, because of the way in which the Greek election sets a precedent for how markets react to an austerity vote, it alone demonstrates a tipping point for determining the ongoing sustainability of the Euro itself. As this issue develops, economists have begun referring to the event itself as the “Grexit” event, and have outlined a potential timeline of events that will occur in the event of Greece removing itself from the Euro.

In stage one of the “Grexit” scenario, the Greek people will determine the kind of action that their country will pursue through their election. If they choose to elect a pro-austerity party, they will remain in the Euro-zone, and endure the coming period of frugality. However, if they should elect an anti-austerity party, or even an anti-euro party, they will likely be forced to remove themselves from the Euro-zone, and re-instate their own currency. Because of the significance of such a vote, the latter outcome results in the “Grexit” scenario.

Upon electing an anti-austerity government into power, the Greek government will likely need to revert to its own currency. This is because of the way in which the ECB has made it very clear that it has no intentions of bailing out a non-austere government. Essentially, the ECB will leave Greece out to dry, and they will be forced to pursue their own means of economic restoration. Given that such an outcome presents a great deal of currency risk to investors, it is predicted that the result to such a decision will be a flight of capital to safe-haven countries, Germany in particular.

However, because of the way Germany will now need to support such a great influx of capital, the ECB now need to begin supporting Euro-denominated banks, so that they can support their new capital levels. More importantly, Germany will need to determine how it wants to support the assets that come with these deposits. Because many of these funds will be coming from countries that are currently supporting the Euro (ie. Spain) they will see that their own currency will start to become unstable from the flight, even though it is within the same currency.

The end result is that Germany will need to decide if it wants to use ECB backing to support the lower quality assets in Spain and Italy using the leverage it has obtained from the new depositors, or pull out from the Euro –zone so that it does not suffer from dramatic Euro-deflation as the crisis continues.

While this is still just a single hypothesis, it comes from Paul Krugman, a noble-winning Economist. Coming from such a reputable source, and given that the contexts of the scenario are plausible, it provides us with a road-map of how to understand how it is that Greece still plays a part in the evolving European crisis.

Update: Interestingly enough, 2 days after writing this article, the Grexit scenario came much closer to a reality as European savers began pulling their funds out of Greek banks en-masse.