When Will Greece Exit the Euro?

By www.TheForexNittyGritty.com

http://www.theforexnittygritty.com/forex/when-will-greece-exit-the-euro
Greece and its debt issues are back in
the news.

A new government refuses to continue
austerity measures that have resulted in
a twenty-five percent unemployment
rate and an unemployment rate of sixty
percent to seventy percent among
youths.

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By comparison unemployment before
austerity measures stood at 3.7 percent.

The problem is the extent of Greek
government debt denominated in
Euros.

When a nation runs out of money it
commonly puts its financial house in
order and devalues its currency thus
reducing its debt burden.

Greece cannot do this because it is part
of the European Union.

One alternative is for Greece to leave
the EU or at least change its currency
back to the Drachma.

When will Greece exit the Euro? Here
are a few thoughts on the subject.

Just a Matter of Time

Bloomberg quotes former Fed
chairman, Alan Greenspan, as believing
that it just a matter of time before
Greece leaves the Euro.

Greece’s exit from the euro is just a
matter of time because no one wants to
risk lending money to the country any
more, according to Alan Greenspan.

Hours before Prime Minister Alexis
Tsipras was due to set out plans on how
to keep his government paying its bills,
the former Federal Reserve chairman
said the nation’s crisis can’t be resolved
as long as it remains in the single
currency.

“I don’t see that it helps them to be in
the euro and I certainly don’t see that it
helps the rest of the euro zone,”
Greenspan said in a radio interview with
the BBC on Sunday.

“I think it’s just a matter of time before
everyone recognizes that parting is the
best strategy.”

Mr. Greenspan offers a common sense
opinion.

Greece needs to use the old approach to
excessive sovereign debt.

The question remains when will Greece
exit the Euro?

David versus Goliath

Greece has a substantially smaller
economy that the rest of the Euro Zone
combined.

And Greece has the misfortune of being
one of the Southern tier European
nations who are viewed by the
Northern tier as being lazy and
spendthrifts.

Thus Germans and others are tired of
bailing out Greece and would like their
money back, thank you very much.

Now it comes down to a game of
chicken according to Reuters who
writes about the Euro Zone Greece
faceoff.

Greece and its euro zone partners
engaged in brinkmanship on Monday,
with leftist Prime Minister Alexis
Tsipras insisting his country would not
extend its reform-linked bailout and
Germany saying it would get no more
money without such a program.

European Commission President Jean-
Claude Juncker warned Greeks not to
expect the euro zone to bow to Tsipras’
demands in a growing confrontation
which spooked financial markets and
prompted U.S. and Canadian pleas for
calm and compromise.

Escalating the rhetoric, Greece’s finance
minister said the euro zone could
collapse “like a house of cards” if Athens
were forced out.

It is unlikely that the Euro would suffer
immediate damage if Greece leaves the
monetary union.

But it could be seen as a precursor to
further dissolution of the EU.

The clock is running on Greek debt and
if the Greek Prime Minister who is
making the rounds trying to fix the
issue cannot get debt relief he may well
go home and take Greek off the Euro
and even out of the EU.

That could be a matter of weeks or even
days.

Getting Ready Just in Case

All things are possible including
a Greek exit from the Eurozone.

BBC News reports that the UK is
making plans.

Attended by the head of the Treasury,
Nick Macpherson, the Treasury’s
director of financial stability, Lowrie
Kahn, and the Bank of England’s
international director Phil Evans

David Cameron asked for information
on the impact on Greece and the rest of
the eurozone of Greece leaving the
eurozone.

David Cameron heard that Greek people
would see their savings wiped out,
inflation would take off, and there
would be a massive devaluation,

He was also told that Greek companies
and banks would face acute financial
difficulties because of the mismatch
between the “hard” euros they would
owe to those outside Greece which
would have to be serviced out of “soft”
or “devaluing” new drachmas.

Things, it seems could go from bad to
worse when Greece exits the Eurozone.

On the other hand if you are one of the
sixty to seventy percent of youth
without work in Greece you may not
see the difference.

When Will Greece Exit the Euro?

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When Will Greece Exit the Euro?