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.
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That's it in a nutshell. They'll have somebody else to blame for the coming Big One. I half suspect they are working for that excuse right now while assuring the Euros they will be helped. The "crisis going to waste" thingy.
how do we allow ourselves to get so tightly entwined in another country’s economy that it causes our downfall??
those reponsible, even though they may be one of us, should be charged with treason - maybe a stretch but....
Spot on, good sir.
However, because of the dire consequences of a Greek exit, EU will stall until after the Greek and French parliamentary elections.
Eventually, IMO, EU will compromise with Greece.
A Greek exit from the euro would lead to a collapse of the single currency.
Who would invest in any euro sovereign debt if it could be defaulted at a whim?
Not in my book. The EUSSR still has plenty of ammo. Before Greece leaves, ECB will issue eurobonds. JMO.
The eurosocialists have not reached the end of the can kicking road, though the cul-de-sac is visible.
So, you think that they will continue to feed cash to Greece? Eventually, the “donors” are going to reach a breaking point.
Absolute nonsense. And I do mean that nonsense!!!!!
Economic situation in Europe were dire long before 2008, nobody wanted to talk about it, now it is on as if Greece is destroying Eurozone, idiocy at its best.
Greece was never a strong in EU, it was always the poorest economy in there, only reason Greece was even allowed in EU was of political reasons, and besides, Greece strongest assets were besides tourism, their food exports.
It is France and Deutschland that need to be look at, as well American Banking Institutions, like Goldman Sachs, remember folks, its all business, it is easy to put a person under the bus and pretend you are safe.
Now big doo dooo hits blading fan and people are looking for scape goats, this is nothing else but screw up what in the flue deals.
I have some news for you, sir. The Greeks have already defaulted on their Eruo based sovereign debt.
After the elections, Greece and EU will sit down and work out a compromise. Call it face saving.
This, of course, fixes nothing. Greece will get some money already promised.
That does not fix Spain, Italy, or France. For them, Euro Bonds (printing money).
Not news. But EZ still has a pot of euros for Grease when they do a little jawboning after the election.
EZ can't let Grease leave.
EZ is still doomed, just not yet.
Permit me to state the obvious:
That is bloody unsustainable and when the bill comes due, it will be damned painful.
What do you suppose will happen whe the bond market figures out, if they haven’t already, that these bonds are no more “safe” than the Euro denominated Greek bonds they already got shafted on?
Bond traders aren’t stupid, after all.
As usual, where there is a market, the big boys will make out like bandits. They can't wait.
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