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Greece considering Eurozone exit?


http://www.spiegel.de/international/europe/0,1518,761201,00.html

Take the money and run, style of thing?

It's easier to pay off your debt when you can just print you own money.
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Automatically Appended Next Post:
Taking a lesson from the good ol' U S of A

Exiting the eurozone is probably the only way to get their economy back on track. Until then they can't be competitive since their currency is artificially high despite their economy not being particularly hot. That said germany is gonna be pissed if they do.

Will piss the germans off they put a hugh sum of cash aside to help them

Well, Germany has bailed them out once, but won't be able to do so again, so what more can the EU do for them?

Personally speaking, I wish they had done it earlier. Myself and Mrs Filbert went on holiday to Greece a couple of years ago and the prices were outrageous due to the £ / € ratio. A can of coke was €3 which was near equivalent to £3 at the time!

If they had gone back to the drachma or whatever the hell it was then you would have been guaranteed to get a boatload of the to the pound.

warpcrafter wrote:Well, Germany has bailed them out once, but won't be able to do so again, so what more can the EU do for them?

The desirability of the European economy as a whole has kept their currency valuable and prevented their massive national debt from destroying their moneys value. That allows their banks to keep doing business with other European banks, and keeps money from flying out of the country because investors still have holdings in euros backed and controlled by the EU.

If they switch to an obviously worthless Greek currency, the banks will get cut off from all other European banks, money will fly out of the country so fast it will make everyone's heads spin, and a good portion of their banks will go bunk. When that happens all the people who loaned them money will take huge accounting hits which hurts their ability to loan, which hurts everyone in Europe.

It would be a really really bad idea. The only upside I can see to it is they have control of their money again, and they can inflate their own nation currency to the point where the can pay off their debt easily. But that’s not good for the Greek people, it's not good for Europe as a whole, it's only good for the Greek government who can get out from under their debt burden faster. But they would destroy a lot of people in the process.

Restoring the drachma would not allow the Greek government to pay off their debt quickly as it is denominated in Euros.

The Greek economy is basically fethed so the value of the drachma would plummet on the foreign exchange markets.

One fairly likely option is default or repudiation of big chunks of the debt. If this happens, the Germans will go ballistic, but they may not be able to do much about it.

If the Greek economy really is badly fethed, and they default as the only option, it doesn't matter what people think about it, the Greeks will not be able to pay back the debts. They'll probably have to live through a generation of two of poverty.

Kilkrazy wrote:Restoring the drachma would not allow the Greek government to pay off their debt quickly as it is denominated in Euros.

The Greek economy is basically fethed so the value of the drachma would plummet on the foreign exchange markets.

One fairly likely option is default or repudiation of big chunks of the debt. If this happens, the Germans will go ballistic, but they may not be able to do much about it.

If the Greek economy really is badly fethed, and they default as the only option, it doesn't matter what people think about it, the Greeks will not be able to pay back the debts. They'll probably have to live through a generation of two of poverty.

Unless they converted the debt to drachmas or just gave the debtors the big fig.

Chile had 15% growth.

Frazzled wrote:
Unless they converted the debt to drachmas or just gave the debtors the big fig.

One of those two would probably happen. Even if they don't convert the debt, they can convert drachmas to euros, pay, drachmas go down, so they just convert more, drachmas go down, etc. But that would be economic suicide.

They may be planning to default sometime in the near future anyway, and they simply want control back of their currency back since all the EU nations are going to stop doing business with them anyway.

This isn't a good thing no matter how you look at it.

I don't wish harm to my European brethren, but it would be nice for me if the euro came down against the dollar. I need to go on vacation.

Actually there is a strong argument to be made that it is a good thing. Greece can't support a hard currency. If they fully pull out they are in a better position to restrict German inports, which is what the Euro really is all about.

Frazzled wrote:

Kilkrazy wrote:Restoring the drachma would not allow the Greek government to pay off their debt quickly as it is denominated in Euros.

The Greek economy is basically fethed so the value of the drachma would plummet on the foreign exchange markets.

One fairly likely option is default or repudiation of big chunks of the debt. If this happens, the Germans will go ballistic, but they may not be able to do much about it.

If the Greek economy really is badly fethed, and they default as the only option, it doesn't matter what people think about it, the Greeks will not be able to pay back the debts. They'll probably have to live through a generation of two of poverty.

Unless they converted the debt to drachmas or just gave the debtors the big fig.

Chile had 15% growth.

To convert the debt to drachmas requires the cooperation of Germany, or some other financial power house. I wouldn't take it. Well, I might take it on very favourable terms that would allow me to buy most of Greece afterwards.

I said they may end up giving the debtors the fig.

Lots of countries have rapid growth when investment is flooding in because they are an attractive prospect.

Frazzled wrote:Actually there is a strong argument to be made that it is a good thing. Greece can't support a hard currency. If they fully pull out they are in a better position to restrict German inports, which is what the Euro really is all about.

So my switching to a less stable currency, potentially defaulting on billions in debt, causing the bankruptcy of much of their finacial sector and the government, and generally pissing off everyone of their neighbors, they can trade less with technologically superior economies?

I understand that foreign imports can harm domestic manufacturer, but Greek manufacturing isn't going to boom when no one in Europe, America, or anywhere for that matter is willing to put money into an unstable bankrupt nation with poor trade relations. Political stabilty goes a long way in business, the instablity that all of this would cause is going to squash any potential to boost exports because of a cheap currency.

I don't look at this stuff for a living or anything, but I just don't see this playing out well.

Greece's problem is not the lack of a decent manufacturing sector. It is rampant corruption, failure to pay/collect taxes, and high social provision such as public workers retiring in their 50s.

Kilkrazy wrote:Restoring the drachma would not allow the Greek government to pay off their debt quickly as it is denominated in Euros.

The Greek economy is basically fethed so the value of the drachma would plummet on the foreign exchange markets.

One fairly likely option is default or repudiation of big chunks of the debt. If this happens, the Germans will go ballistic, but they may not be able to do much about it.

Invade?

Invade?

Would be ironic considering Germany sold them quite a lot of weapons.

Kilkrazy wrote:Lots of countries have rapid growth when investment is flooding in because they are an attractive prospect.

*cough*Thailand*cough*

Kilkrazy wrote:Restoring the drachma would not allow the Greek government to pay off their debt quickly as it is denominated in Euros.

The Greek economy is basically fethed so the value of the drachma would plummet on the foreign exchange markets.

One fairly likely option is default or repudiation of big chunks of the debt. If this happens, the Germans will go ballistic, but they may not be able to do much about it.

If the Greek economy really is badly fethed, and they default as the only option, it doesn't matter what people think about it, the Greeks will not be able to pay back the debts. They'll probably have to live through a generation of two of poverty.

What Exports does Greece produce?

I can think of only 3: Wool, Leather; Tourism.

With such a small base of goods for Export (which 2 can probably be Imported from elsewhere cheaper) I do not see any strength in Greece, unless the Mining Corporations find something worth digging up.

Kilkrazy wrote:Greece's problem is not the lack of a decent manufacturing sector. It is rampant corruption, failure to pay/collect taxes, and high social provision such as public workers retiring in their 50s.

I had heard this first hand from a national while I was at University. Apparently, Greece has higher rates of corruption than even Turkey and Egypt.

dogma wrote:

Kilkrazy wrote:Lots of countries have rapid growth when investment is flooding in because they are an attractive prospect.

*cough*Thailand*cough*

Referring back to my earlier note RE: Exports, I cannot see why Greece is not the Mediterranean (sp) equivalent of Thailand. Tourism is their primary Export.

AvatarForm wrote:
Referring back to my earlier note RE: Exports, I cannot see why Greece is not the Mediterranean (sp) equivalent of Thailand. Tourism is their primary Export.

They don't have control over their own currency, and so cannot maintain an overvalued peg against the dollar in order to instigate a regional financial crisis.

Also, you can't really undercut Greece on tourism, whereas ltos of countries started to undercut Thailand after the yen was devalued.