Greece faces "the spectre of bankruptcy" (again)

Rasczak

The Greek Prime Minister has warned the country faces “the spectre of bankruptcy and all the dire consequences that entails”:
We’re on the brink, warns Greece ahead of summit - Telegraph

The PM said that unless the country’s international backers agreed to a new bail-out, Greece would be unable to pay off its loans and be forced out of the eurozone.  Yesterday the Greeks rejected a German plan for the EU to takeover the country's finances.

So what should the EU do here?  Allow Greece to fall out of the Eurozone (surely a long term credibility issue for the Euro if that happens)?  Or stump up more cash to keep the country from bankruptcy?  Should Greece be compelled to take on foreign EU servants as it's Ministers?

kav

In the industry I work in, recent months have seen a significant amount of work go into analysing our systems to determine whether or not they will be able to cope with a country dropping out of the Euro and going back to its original currency. I don't know how close we are to that (or not) but what I do know is that there is a lot of time and effort being invested in being prepared for it should it happen.

The take is that if it does happen, the change will go ahead on a Friday as the markets close, and when they reopen on Monday the new old currency will be back in place. There'll probably be a bit of overtime for the IT folks that weekend...

johntheexpat

The Greeks should get their house in order or be dropped from the Euro.  I don't think dropping one or two countries from the Euro would do its credibility any harm at all.  It would probably enhance it.  When the Finance World sees that the Euro is no longer prepared to allow countries to be carried by the rest, the Euro will be perceived as a much more viable entity and thus a much more powerful grouping.

Sorry Greece, but my vote is for you to go.  I don't believe the political will is there to actually get the country sorted out.  The corruption, the tax evasion, its all endemic and no-one seems to be man enough to sort it. I shall wish you luck as I wave you goodbye, Cheerio, there you go, on your way!

Rasczak

But it could be very devisive and harmful to European integration.  If countries are 'dropped' from the Euro every now and then, investors seeking the stablity of the Euro would invariably look to avoid countries likely to be so effected.  This could create a two-track Europe with the poor getting poorer whilst all investment went into AAA, super-safe countries like Germany.

BISHI

I agree Greece should be cut loose - I do not agree that the Germans should be allowed to run Greeces finances - all they will do is privatise everthing and, as a Greek chap pointed out on Today this morning, what is the poit of selling your assets at the bottom of the market when no body is buying and they will be woefully undervalued..? I guess the Germans could go in, buy the whole infrastructre assets for a song and then charge the Greeks through the nose for what was already theirs whilst taking the money they paid straight back to repay their German banks......................win win for Germany.
Oh wait a minute, isn't that what the Euro is all about anyway...?

johntheexpat

johntheexpat

Well, it would certainly be devisive along the lines of those who get chopped and those who don't

But if dropping Greece and a couple more of the wekest links firms up the rest of the zone and bucks up the ideas of those who remain, then can that be a bad thing?  The Euro's problems all seem to stem from over-expansion into countries that really shouldn't be there, so a re-trenchment shouldn't harm the core at all.  The big problem would be Italy.  If they watch and learn from what happens to the minnows, then that would greatly enhance the Euro as a concept.  If they don't learn and continue as they are and have to be forced out, then that would, with any shadow of a doubt, be a hugely serious, possibly fatal blow to the currency.

Wild Weasel

It's too late for that now. The Euro project was the EU's Operation Barbarossa and now they're stalled in a financial winter.

EarthRod

Good way to put it.

Cloverleaf

Greece is a basket case. The EU needs to grasp the nettle and kick them out the Euro.

The only barrier (and it's a big one) is the Euro fanatics who believe that the currency has a divine right to succeed.