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that the if Greece were to abandon the Euro and re-initiate its own currency and monetary policy that it would cause all kinds of logistical and credibility problems for banks throughout Europe, leading to the probable collapse of the EMU and euro. I'm skeptical of that argument, but does anyway think it has validity, and why? It seems to me that it might be a software headache for IT departments to worry about from a technical standpoint, somewhat like the drills IT departments have to go through when mergers occur, but that it really would be a much more trivial issue than people are saying it would be.
by santiago on Thu May 6th, 2010 at 05:05:28 PM EST
No matter what, economists will be saying [Europe.Is.Doomed™ Alert] .

Greece would sooner be allowed to default on its debt and stay in the Euro than be forced out or choose to restart its own currency, IMHO.

The brainless should not be in banking -- Willem Buiter

by Migeru (migeru at eurotrib dot com) on Thu May 6th, 2010 at 06:23:28 PM EST
[ Parent ]
The problem isn't whether or not Greece defaults. One way or another it has already past that post. The problem is how Greece continues to provide for the desires of Greek citizens to enjoy the comparable levels of social welfare benefits that citizens of the wealthier EU nations do.  (For example, right now, public spending in Greece is just 40% of GDP, about the same as the US, which is the lowest, or near the lowest, in the industrialized world.)

It appears almost impossible for that to ever occur, given the structure and resources available to the Greek economy relative to what other eurozone economies enjoy, without significant transfers of wealth from richer states to Greece, or without Greece being able to implement its own monetary policy. It's a contradiction embedded within the EU framework that requires a solution, and that solution is likely going to injure the interests of at least some powerful classes in the wealthier countries.

by santiago on Thu May 6th, 2010 at 06:49:59 PM EST
[ Parent ]
I'm beginning to NOT trust these GDP figures at all, AND I'm beginning to not listen to arguments based on them...

Align culture with our nature. Ot else!
by ormondotvos (ormond.otvosnospamgmialcon) on Thu May 6th, 2010 at 09:57:05 PM EST
[ Parent ]
Well, the Greek budget is about 120 billion, and GDP is 250 billion, but we can't assume that 120 billion gets spent on social services. There are a lot of other costs, such as debt service and armaments and a variety of other things besides social services.
by Upstate NY on Fri May 7th, 2010 at 12:32:21 AM EST
[ Parent ]


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