Does Greece Have a Bad Hand in EU Negotiations?

     This was the claim of Citgroup's Steven Englander this morning, though I disagree:

     "Greece can expect its European creditors to play hard ball in negotiations over its bailout for a simple reason: the prospect of a Grexit just doesn't instill as much fear as it once did, Citigroup's Steven Englander said Monday."

      "It's undesirable, but it's not a catastrophe as it would have been in 2011, 2012," the head of Citi Global's G10 FX strategy told CNBC's"Squawk Box." "So I think that they're going to play somewhat hardball and try and get some of these reforms they actually want."

     "Greece has a very bad hand right now," he said.

     http://www.cnbc.com/id/102776751

     Englandier's argument is that post QE a Grexit doesn't threaten the EZ itself. This has some truth to it though it's hard to predict the exact effects of a Grexit. 

     http://www.cnbc.com/id/102768144

     "Jurrien Timmer, director of global macro at Fidelity Investments, also said a Grexit was unlikely to lead to a systemic collapse of the euro zone. He said the Greek debt crisis today is much different than it was in 2011."

     "Back then their debt was held by thousands of private investors. Now 80 percent of it is in the hands of public institutions, and with the QE happening in Europe, it's not as contagious as it is to the periphery—to Italy and to Spain and Portugal. "It is a much more contained situation now than it has been in the past."

     For the EZ as a whole I think there may be some truth in it. The futures are rallying right now on reports that Greece is willing to make concessions. 

    "Markets rallied Monday as Greece signaled it was willing to make concessions ahead of an emergency summit of euro zone leaders. But shortly before 7 a.m. EDT, European finance ministers indicated proposals submitted by Greece were not substantial enough to convene a summit, and the meeting of the Eurogroup would be pushed off until Thursday."

    If this is the case, though, I'm not really sure why the Greeks are this desperate to stay in the euro. I can believe that the EU as a whole is less at risk than previously from the prospect of a Greece exit but I think the Greeks themselves may be being overly pessimistic about how a Grexit would go. There's a good case that they should follow exactly this path. 

    http://diaryofarepublicanhater.blogspot.com/2015/06/would-grexit-be-epic-tragedy.html

    http://diaryofarepublicanhater.blogspot.com/2015/06/who-loses-if-greece-leaves-eruo.html

    You can make the case that the big loser if Greece leaves will not be Greece itself but Germany whose exporters will no longer benefit from Greece driving down the value of the euro. 

    So I don't buy that the powers that be in the EU don't care so much about a Grexit anymore. If they didn't it would have happened long ago.