View Full Version : The Real Reason that the EZ doesn't want Greece to leave

05-18-2012, 06:42 PM

Yes a Greece exit would be better for Greece than staying in the EZ, but it wouldn't make much difference for Greece other than the ability to monetize its debt.

Eurocrats are especially concerned that Greece might leave the euro – but not for the reason you might think. Their worry is not that Greece will sink into a state of Levantine poverty: that has already happened. No, their true fear is that, after a few wretched months, Greece would bounce back, using its newly competitive currency to price its way into the markets and export its way to growth.

If that were to happen, other countries on the periphery of the eurozone, also struggling with an over-valued exchange rate, might try something similar. The whole euro project would unravel faster than you could say ‘Jacques Delors’.

This is true. But it will only carry Greece so far. If Greece cannot control its spending, which we have seen no indication that it can, this advantage will only be sort-lived. I don't think that Greece can control its spending, or collect it taxes.

05-18-2012, 09:10 PM
Wow, that is a very interesting perspective. Walk away from the debt and become a cheap exporter. It seems the Greek culture might prevent that, and especially the spending you refer to, but that is a fascinating possibility. It seems unlikely to work also considering the lavish lifestyle which was already prevalent there. If they were starting from scratch it would be much more feasible.

05-18-2012, 09:27 PM
A very good summary. Perfect in fact.

05-18-2012, 11:18 PM
Then again, if the euro had been about economics, Greece wouldn’t have joined in the first place.....snip~

Read more: http://www.dailymail.co.uk/debate/article-2145560/Merkels-real-fear-exit-Euro-good-Greece.html#ixzz1vHlnpHBT

Pretty much says it there. Plus I see Britian won't be breaking out of their Hyper-inflation anytime soon. Althought why would they call Hollande a Radical? Euro Fanatical.

Also What is up with Poland, Austria, Romania. I thought they all have a problem with the Euro?

05-19-2012, 08:47 AM
Correct, the Eurozone is about politics, not economics.

05-20-2012, 11:04 PM
well it's a lose lose situation for them, obviously is Greece reverse it's luck after leaving that's devastating but it's not like them becomming a hell hole is going to do do them a lot of good either. espeically if the destabilization reach beyond economics.

That, and the precedent of countries defaulting on a lot of bailout money is pretty bad too.

05-21-2012, 06:43 AM
Well after the G-8 meeting.....they all agreed to carry Greece some more. I put up a piece on it. Looks like they had Merkel cowed. As she now has to deal with Hollande. Who is about spending.

05-21-2012, 08:47 PM
Well i'd think unfortunately from a political POV that is more likely, it's not like they were gonna come out and say "Hey man we'll invade Greece and take away anything that's not nailed down and occupy all their tourist spot as collatoral for their debt!" or that "hey man we're gonna let greece leave the europe thus admiting we threw a few gazillion dollar of tax payer money in the water!"

05-21-2012, 09:07 PM
The next German national elections will end this dog and pony show. The Germans are tired of backstopping what they see as a losing bet.

05-21-2012, 09:49 PM
The next German national elections will end this dog and pony show. The Germans are tired of backstopping what they see as a losing bet.

well that is the easy part, the harder part is settling the aftermath I'd think.

And while we're looking at the Eurozone, Argentina is (not so quitely) going to hell as well... AGAIN. (talk about a basket case of horrific financial managed country..)