Sunday 21 June 2015

"GREXIT OR NOT" : THE LAST CHANCE SALOON !


Two urgent meetings have been organised in Brussels tomorrow by the EUROZONE, for the Finance Ministers and for their Leaders.

The main question to be decided can only be whether an effort can or should be made to avoid the "Grexit" ? 

The cost of a complete write-off of loans to Greece would be at least 250 billion Euros !  But there are other considerations which must be weighed up.  Will Greece accept to stay in the EUROZONE, particularly if there are conditions attached to a complete write-off of their debts ?  How will international Exchange Markets react ?  Will the EURO be attacked ?  

How will national electors react, in Germany, in Greece and elsewhere ?   No politician wants to lose face or provoke unfavourable public reactions at home or abroad !

There seem to be only one possible alternative.  Either the Greek debts are written-off without any conditions and Greece stays in the EUROZONE, or there is a total moratorium on any repayments or interest charges for about 20 years and Greece stays in the EUROZONE. 

If Greece is forced out of the EURO, the country would immediately face huge problems trying to adopt the New Drachma  as its currency.   A Moratorium would therefore seem to be THE solution. In 2035 repaying depreciated EUROS (due to normal inflation) would be less of a burden for Greece ! 

It is a pity that it has taken six months to find a solution, whatever it is !

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