Philippe Vaccaro
8:39 PM (edited) - PublicIt is not in the interests of either Greece or the rest of the eurozone to reinstate the drachma. An exit from the euro would lead to a run on the banks and the collapse of the Greek banking system. If Greece was shut out of international money markets, the temptation would be to meet the government deficit through printing money, leading to rapid inflation. People's savings would be wiped out. And an effective devaluation might do little for Greece's balance of payments anyway, except possibly through tourism. Poverty would become increasingly widespread. The "contagion" everybody has been warning about would get worse because Greece would not leave the euro without also walking away from its debt obligations. Banks exposed to Greece would suffer massive losses.
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Philippe Vaccaro
8:32 PM (edited) - PublicIt's still possible that everyone could pull back from the brink. The Germans could soften their demands – next month, Greece is supposed to be outlining further billions in cuts, something which even pro-bailout politicians are starting to balk at. The can could be kicked down the road some more. But the euro's fundamental problems will remain. And it's equally possible that the EU will merely use the time to erect bigger financial walls around Greece, hoping they can leave it to its fate. Planning for a Greek exit, now seen as likely by many, has stepped up a gear. Vodafone, a major presence in the Greek telecoms market, said it now sends all cash earned in Greece to the UK "every evening." At Glaxo SmithKline, no cash is left in Greece or "most European countries."
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By Joe Clark For The Herald Bulletin Tired of hearing about Greece yet? I wish my last Grecian thought was of Greece's gyros and islands and not its bloated debt and rocketing unemployment. Greece makes for an interesting headline, and it's hard to imagine why it wouldn't: protest-torn, ...
