Will Greece and PIGS pull out of teh Euro?

[johnfm]

Seems to be recommended by CEBR:


http://business.timesonline.co.uk/tol/business/eco...

[ringram]

Not the only people recommending it.

Greece has almost a zero chance of paying their debt back. So need to default.
If that can be done within the Euro and contained with the 750Bn Euro fund, maybe it will hold together, but you can rest assured the market will move onto the next weakest until they have all defaulted or the bear up to the strain.

Time for socialism to uncurl is icy fingers of lethargy, failure and entitlement from the throat of the once great countries.

The cold war didnt end because the west won, it ended because Russia realised Europe was already communist!

[eldar]

If they did leave the Euro, how would it work? Bring back the Drachma x per euro, then devalue?

[loafer123]

The sensible way to do it would be to reschedule their debt and then exit the euro, so they give themselves breathing space to rebuild.

The other option would be Argentinian style default, but it's not for the faint-hearted and they at least have oil...

[Fittster]

What's in it for Greece? Their debt will still be in Euros.

They would be better for with a straight default

[loafer123]

If they went for a full default, they would be incapable of raising money in the forseeable future, so I wonder whether they would want to go that far.

That's why I was assuming a forced conversion to Drachma debt might be preferable, but I suppose you are probably right - maybe meltdown is that close by...what's your view?

[Ozzie Osmond]

Will Cornwall leave the UK and set up its own currency?

The only realistic option for the Greeks is to buy a phrase-book and learn some German.

[Fittster]

anonymous said:

[redacted]

Is there a realistic alternative to some form of default/restructuring of the Greek debt? As I understand it they simple don't have the income to pay their current debts, they are will past the point of no return.

As someone with a far better understanding of these things than I said:

"The problem with Europe is that some of the peripheral states can’t keep up with the interest on the money they borrowed. Greece, for example, is scheduled to have debt equal to 150% of GDP by 2011. Even at 5% interest, it will take GDP growth of 7.5% per year just to keep up with the interest payments. Since growth in Greece is not expected to come in anywhere near 7.5%, and will probably even be negative, it will sink further into debt. There are no reasonable assumptions you can make that show how Greece could ever repay the current debt, let alone more of it. The debt has gone bad. It is dead. It cannot be revived or repaid."

The idea that a default means you can't ever borrow again seems to have be false when you consider what has happened in Argentina.

[Fittster]

Ozzie Osmond said:

Will Cornwall leave the UK and set up its own currency?

The only realistic option for the Greeks is to buy a phrase-book and learn some German.

As naughty Germans will tell you, in times of trouble an Argentinean phrase is very useful.

Edited by Fittster on Tuesday 1st June 23:08