Eurozone Debt Crisis: Will The Grexit Finally Become Reality?

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The Eurozone debt crisis has long needed a "Grexit" or some other landmark event to occur to change the direction the beleaguered continent is headed.

When Mario Draghi announced that he would do whatever he can to preserve the euro, it seemed that moment was imminent. Since he uttered those words on July 26, the IBEX 35 in Spain has gained 17%, while Italy's FTSE Milano Italia Borsa is up 13%.

But the rally may quickly fade.

Draghi and the European Central Bank have not taken any drastic measures since then and investors will most likely have to wait until the September 6 meeting to hear what's next.

On Monday ECB policy maker Joerg Asmussen played to the sentiment felt by many German officials that it might be time to let Greece go from the euro.

"Firstly, my clear preference is that Greece should remain in the currency union," Asmussen said in Germany's Frankfurter Rundschau."Secondly, it is in Greece's hands to ensure that. Thirdly, a Greek exit would be manageable."

However, Asmussen warned that a Grexit would be costly, not just to Greece but to the entire continent as well. "It would be associated with a loss of growth and higher unemployment and it would be very expensive – in Greece, Europe as a whole and even in Germany," Asmussen said.

The Key Dates in the Eurozone Debt Crisis

Investors and economists are also now anxiously looking towards September 12 as a day that could potentially change the course of the euro.

That is when Germany's Constitutional Court will issue its decision on whether the European Stability Mechanism (ESM) and the fiscal pact are compatible with the German constitution.

The ESM is the 700 billion euro ($820 billion) bailout fund that is set to take the place of the European Financial Stability Facility (EFSF).

The fund has already been approved by German lawmakers but German President Joachim Gauck will not sign the ESM and the European Union fiscal pact into law until a full legal review has been done.

The ESM must be approved by the Eurozone nations that account for 90% of its capital base. Germany's share of funding is 27%, so its agreement is essential.

The injunction would not cripple the ECB's plan, as the EFSF still exists but has less ammunition, i.e., money, to work with.

Asmussen and many other economists want to see the ESM initiated as soon as possible. "The ESM is a better instrument for dealing with the crisis than the EFSF," Asmussen said.

Yet some German officials do not want to see the ESM approved and would rather see an immediate Grexit.

Taking a hard stance on Greece, German Finance Minister Wolfgang Schaeuble said on Saturday, "I have always said that we can help the Greeks, but we cannot responsibly throw money into a bottomless pit."

On the radar for many investors is a report due next month by Greece's creditors assessing the progress the country has made in meeting its bailout goals. Their analysis will determine if Greece receives the next installment of aid it needs to stay in the euro.

Meanwhile, Greek Prime Minister Antonis Samaras will meet with German Chancellor Angela Merkel on Friday and French President Francois Hollande on Saturday. Samaras is seeking to negotiate a two-year extension on the repayment of bailout loans.

Currently, Greece is due to start paying back the loans in 2013. The extension would bring Greece in line with the deals Ireland and Portugal negotiated with creditors where payments don't start until the second half of 2015.

Also investors will need to pay attention to the Federal Reserve meeting at Jackson Hole, WY scheduled for Aug. 31- Sep. 1. Mario Draghi will be the keynote speaker on Sep 1 and is expected to speak at 10 a.m. EDT.

Investors may have already priced in the bold statement by Draghi and if no action is taken at the next meeting on Sep 6, reactions will be negative.

"The bottom line is that the market is expecting the ECB, when it next meets, to announce significant policy measures to help sovereigns," Nick Stamenkovic, market strategist at RIA Capital Markets told CNN.

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