This article from AOL news caught my eye: http://money.aol.co.uk/2012/02/16/eu-urged-to-let-greece-leave-euro/?icid=money|DL_3_link
Commentators on public radio have been split on the issue of Greece's potential default. One argued that a default and return to the drachma is unthinkable and would be too costly for Greece. Another argued that Greece has no choice -- in order to become competitive and have economic growth, Greece will have to leave the Euro and use a devalued currency that would ultimately allow for economic growth in the medium term, even though it would lead to difficult times in the short term (hard to believe they can get more difficult than they are now).
As this subheading from a BBC article states - "Something has snapped. No longer are Europe's leaders pledging to save Greece at all costs." http://www.bbc.co.uk/news/world-europe-17040565
Uncertainty continues...http://www.washingtonpost.com/business/markets/debt-crisis-contagion-fears-back-due-to-continued-uncertainty-over-greek-bailout/2012/02/16/gIQAFfJHHR_story.html
So what do you think? What do you ascribe the root cause to be?
ReplyDeleteThat's a long and complicated story, but it all goes back to how the Euro got started. They started a currency union without having political or fiscal measures in place to keep countries from exceeding the debt limits and other criteria. It's clear now that Greece had cooked their books to even meet the criteria for joining the Euro. Then they binged on cheap credit once they became part of the Euro and when the downturn came discovered they couldn't pay their debts and needed to be bailed out. I refer you to the Euro Crisis links on this page for more detail, but many commentators have argued that the Eurozone was doomed to failure without an ECB that could act as a lender of last resort, or a plan to deal with these types of crises.
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