Skip to comments.Greece Considers Exit from Euro Zone
Posted on 05/07/2011 8:39:45 AM PDT by DeaconBenjamin
Sources with information about the government's actions have informed SPIEGEL ONLINE that Athens is considering withdrawing from the euro zone. The Euro finance ministers and representatives of the European Commission held a secret crisis meeting in Luxembourg on Friday night.
Greece's economic problems are massive, with protests against the government being held almost daily. Now Prime Minister George Papandreou apparently feels he has no other option. German government sources knowledgeable of the situation in Athens indicate that Papandreou's government is considering abandoning the euro and reintroducing its own currency.
Alarmed by Athens' intentions, the European Commission has called a crisis meeting in Luxembourg on Friday night. In addition to Greece's possible exit from the currency union, a speedy restructuring of the country's debt also features on the agenda. One year after the Greek crisis broke out, the development represents a potentially existential turning point for the European monetary union.
The meeting in Luxembourg has been declared highly confidential, with only euro-zone finance ministers and senior staff permitted to attend. Finance Minister Wolfgang Schäuble and Jörg Asmussen, an influential state secretary in the Finance Ministry, attended on Germany's behalf.
Schäuble seeks to prevent Greece from leaving the euro zone if at all possible. An internal paper prepared by his ministry warns of dire consequences if Athens were to drop the euro.
"It would lead to a considerable devaluation of the new (Greek) domestic currency against the euro," the paper states. According to German Finance Ministry estimates, the currency could lose 50 percent of its value, leading to a drastic increase in Greek national debt. It calculates that Greece's national deficit would rise to 200 percent of GDP after such a devaluation. In other words: Greece would go bankrupt.
(Excerpt) Read more at spiegel.de ...
Look at how the graphic loves to tell people about the interest rate Greece & Portugal pay “5 and 6%”. That’s a bad deal. You could get that on a SAFE investment.
I hope they do leave the Euro. One way or another the “eurozone” will get down to 10 states.
This article is totally crap, and has been thoroughly debunked. No one is leaving the Eurozone.
Translation: They want to go back to using a currency they can print as much of as they want so they can continue to spend recklessly. As long as Greece is on the Euro, they can't do that.
The problem is...if you even consider the idea...then what? You’d have to reprint the Greek Drachma, then you’d have consider the exchange rate...giving everyone a very good deal in Greece. Instant inflation going into the thousands, and it’d take at least three to five years before it’s become a safe bet. Most Greeks would start to drift toward another currency...like the dollar or Euro or even some Saudi currency...just to pay for things in a more legit way.
Yeah, it is stupid...but if you were a Greek political figure looking for an exit to this mess....it does take the Europeans off your back.
Dear European Union; if a large wooden horse shows up outside your door...set it on fire. Beware of Greeks bearing gifts. Just ask Troy.
I don't know if it's crap, I do know it's been denied by Greece. Then again, there have been countries that denied needing a bailout from other EU members and then ended up getting a bailout from them. So I don't know who's telling the truth.
It’s also been denied by the Germans and the European Union, and the meeting was supposedly to have taken place last night, and so where is the exit report?
Der Spiegel is a bunch of leftist kooks with no more credibility than any other leftist kooks. They want to cause trouble for Merkel, and nothing more or less than that.
I don’t know how useful the data in the chart is. It shows Spain as being in better shape than the Fatherland, and that isn’t true.
You may be shopping in the wrong place. There waw some 2 year Greek paper the other day paying better than 20%. Not bad for online gambling.
I can see why some of the countries would want Greece to leave; there was a lot of debate about even letting them in to begin with. Why would other EU nations be “alarmed”?
When you say 2-year, does that mean the principle is repayable in 2 years?
Yes, that is the promise. The interest rate reflects the risk of default, however.
In an unmanipulated market, US 2 years would probably be trading about 5% instead of .33%
wow they’re at 0.33%??? That’s much lower than inflation! Why would anyone buy that?
How is it manipulated?
The Federal Reserve is buying up the government debt at rates far below what the market would demand if there was not interference in the free market. If you or I were to buy debt, we’d require risk (both default and inflation) to be factored in. If funny money is used, there isn’t the same requirement.
Sometimes, the best you can do is minimize your losses. Some can only buy AAA rated products. Some are more worried about return OF investment than return ON investment. And then there's the Fed.
Actually, inflation adjusted Treasurys (TIPS) were selling at a NEGATIVE rate last year (not sure what they're doing now, firefox has gone all full screen mode on me at the moment).
I hope they do. Europe is basket case anyway.
Then Greece can go after the war criminals in Germany and finally get war reparations. They will also be able to expel illegals.
“The Federal Reserve is buying up the government debt”
Could you possibly explain to me - does the Fed print money then lend it to the government at interest, or not? My genuinely libertarian economics professor says that is not so.
If not, where are they making the money that people are always saying they are making? What is their main angle?
When I look at the struggles which Greece and now Italy face, and the self-righteous criticism which flows from other EU nations that refuse to offer any assistance (or even allow the illegals to cross their border), I am at a loss for words.