Skip to comments.Greek exit from euro could plunge US into recession
Posted on 05/25/2012 1:57:30 PM PDT by SteelToe
If Greece leaves the euro, the U.S. economy could easily slip into recession. That cost is worth bearing, however, given the long term consequences of Europe struggling with a currency regime that makes little sense.
Essentially, Athens would exchange drachmas for euros in circulation among its inhabitants, remark private debts and bank accounts to drachma, and until conditions stabilized, limit withdrawals at Greek banks and capital outflows.
As the drachma fell in value, Greek exports would increase, reducing unemployment. consumers and businesses, with their debt re-denominated into a cheaper currency, would enjoy a windfall and spend more. All would help lift the Greek economy out of crisis, but this can only happen if Germany and other European governments cooperate.
(Excerpt) Read more at foxnews.com ...
Well it is good to know that we are NOT in a recession right now.
Yes, it could damage the "booming" US economy. /sarc
Submitted for your perusal.
The euro was a bad idea with the best intentions, and now the sensible course for all involved is to cut losses and return to the sanity of national currencies
I don’t agree.
The Euro was a bad idea, it was started to ruin the dollar in the world market, It certainly started to do that up until countries started getting eaten up by debt.
Our own debt is going to put us in a deeper recession sooner or later anyway, We are already in recession , it never ended. All talk by Obama of our coming back from recession was and is BS.
After 0bama, Reid, and Pelosi could it even be a noticeable negative change?
It's an election year with a dimocrat incumbent for POTUS, we CAN'T be in a recession even if we are!
Sounds like the start of World War I
If a place as insignificant as Greece (or Serbia in 1914) can set off events that will turn the US and the world economy on its head, then the system is loaded and primed for explosion anyway. Doesn’t matter what the spark is.
Kinda reminds me of the trailer of a Doctor Who episode called, “The End Of Time.”
Or not. But I’m sure that Obama will try to blame it on Greece.
If Greece exited the Euro, no one in North America would notice if it weren’t reported in the press.
If Greece exited the Euro, no one in North America would notice if it werent reported in the press.
We’ll notice it... their counterparties will demand a bailout , we are already THE source of funds for Europe anyway ... this will be yet another QE and we will see it (at the least) in inflation.
“Well it is good to know that we are NOT in a recession right now.”
Darn. Just when I was starting to sit back and roll in it!
there fixed it...
Spend more on what? Olive oil? What other consumer goods does Greece manufacture? Imports would double in price -- the Greeks might spend more, but they'd get a heck of lot less for their money.
Devaluations only benefit governments. They are the ultimate inflation.
I wish that some bright individual would suggest that the way out of the pit for Greece is to use the old German
Papiermark -> Rentenmark -> Reichsmark technique.
Their fiat currency Papiermark was a hyperinflated disaster, so to move to a new, stable currency, they created an intermediate buffer currency, the Rentenmark. It was just used by banks and governments, and was backed by gold, so was extremely stable.
Once it was working at a high level, then the Reichsmark, backed by Rentenmarks, was introduced. It could not inflate, and remained stable through WWII.
In Greece’s case, when the Drachma goes to heck, the European Central Bank should introduce an intermediate stable currency, for example called the “Greco”. To leave Greece, Drachmas would have to be converted to Grecos, then converted from Grecos to Euros, all carefully managed by the ECB.
Anything Greece exported would be bought by the ECB and resold at a markup to other nations, with the markup going to reduce the Greek debt. And commodities the EU had in excess could be sold to the Greeks at a deep discount.
This would do much to strengthen the Drachma, with the goal of it eventually becoming directly convertible to Euros.
Good grief...obama's been screwing the pooch on the economy for over 3 years now. We're knee deep in a depression and the media can't hide the fact.
So now they're saying it could get worse?!? Why? greek exports? Yeah, a sea of olive oil is going to break us even further....more likely because obama will bail them out I'm thinking...
@#*$& all socialists.
Silver lining: The US economy may roar back as Europe inevitabley plunges into another of their cyclic genocidal wars.