Monday, June 04, 2012


As I understand it:

If Greece leaves the Euro then there will probably be a capital flight from other Eurozone countries, a series of financial collapses of institutions which own Greek deby and in the long run Greece will start to recover with a massively devalued Drachma.

If Germany and France commit to keeping Greece inside the Eurozone then Greece's economic and political malaise will drag on but they will be able to borrow with German backing. Greece's fiscal policy would be set in Brussels and Berlin for the forseeable future.

However given that we are talking about the EU here, what happens if nothing is decided at any point? If everything just continues as it is indefinately- with no actual decision one way or the other being made. As far as I can see that is what is likely to happen the Germans are not going to continue to throw money at Greece, the Greeks won't accept the massive levels of cuts that are necessary and the EU won't kick Greece out of the Euro.

1 comment:

James Higham said...

The thing is, they can define it as they wish. Five banks crashed in the U.S. in January. Did anyone hear of it? No because the regulator defined that they hadn't crashed - they made up new definitions.