If I hear the statements of the key figures in the eurozone , it seems more and more likely that Greece eurozone such move for the block that it forces a Greece to leave the euro. The term ‘Grexit’ or ‘Grexident’ could be changed better than ‘Grexpulsion’
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The question is whether this actually happen or that the statements are all part of the negotiating game. But if Greece leave the eurozone / be put, what happens then?
Grexpulsion
There are many possible scenarios about what would happen if Greece actually leaves the eurozone, but in this column I shall confine myself to one scenario:. the crackdown
If kukelen Greece out of the euro, they will be giving each other the blame. The Greeks will say that the eurozone tried them broken to make, while the eurozone will say that the Greeks made it impossible for a longer stay in the eurozone.
Here I must mention that the setting of one euro country can not but the euro zone may enforce it (no money to give more and ECB crane turn down). This is something the Greeks only going to come into the rhetoric at Grexpulsion.
The truth is, as so often in the middle, because Greece needs to cut properly, but without a large debt discharge that makes no sense. Furthermore, it would also be one of the biggest causes of this misery must be removed, the euro (see my column last week).
Criminal Expedition
In any case, the eurozone will want to minimize the impact of a Grexpulsion. This means that the rest of the PIIGS (Portugal, Ireland, Italy, Greece and Spain) should be made clear that a euro exit is absolutely no fun. This option should be made as unattractive as possible.
This means that the eurozone and the EU will act tough against Greece. Where possible, batter put on all foreign assets (something politicians in the PIIGS not think so fine …), trade barriers will be raised, visa (abolishing Schengen) will be established, the ECB runs the Greek banks the neck, and so on.
Many of these measures are now probably not possible because of the many conventions of both the EMU, EU and WTO, but if there is something the EU / EMU adept, it is stretching agreements.
Salad
However, the euro area will, where possible, punish Greece. But the role that will have to play the remaining PIIGS in this, is not fixed. If there are large electoral shifts take place there, then it can so that the crackdown is weakened.
Furthermore, the politicians in the PIIGS will not fail to improve their position. The desired crackdown will likely be “bought” to be, which means that the rest of the PIIGS concessions will be given. Weakening of the cuts, more money for projects, and so on, than among the possibilities. It will be a nice wrangling and the atmosphere will determine not improve in the peace machine we call the eurozone.
Use crisis
Greece will after this kind of action or in the hands are driven from Russia and / or the Chinese. Something that not many will be happy with. But as so often, every disadvantage has its advantage.
The Russian threat to the EU, what is to happen very soon, can be pretty used to sell further integration within the EU to the frightened voters. An EU army, secret service and so on, can be just reality. So Grexpulsion will not be seen as 100% bad by the EU.
Risk of infection
However, the ECB has a Grexpulsion be a very tough on her plate. The financial world is very strong and intertwined problems of Greek banks so can cause a domino effect.
Furthermore, the ECB’s large holder of Greek government bonds. This will probably have to be written off for 95% (waking taxpayer!). Now that the ECB may, over all printing and ensure that when national governments their financial sector must come to the rescue, they can easily and cheaply borrow through programs like QE ( quantitative easing , see column last week). The current QE program will be expanded and broadened (to other asset classes) should be.
Danger and opportunity
As a supporter of conservative central bank policy, I am not here cheerful (see this column of my hand). The presentation of the final bill will therefore be deferred fixed, only the amount of the final bill will be up significantly.
The world for the investor is certain is experiencing interesting times, where there are many dangers, but too many opportunities.
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I do not get it again … what is it with Greeks ?! For years we sit with it in our stomach. They will no longer by works, so go do not pay taxes, they plunder their own empty benches, etc, etc. The taxes are still a mess in the country. This was years have been back already on order. What … this had to join the EU and adoption of the euro should be in order. Like so many other things that the country totally meets.
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The whole of the EU and the euro is us, the citizens unsolicited throat pushed by a bunch of crazy lazy to make one powerhouse of Europe. History will repeat itself again which will have disastrous consequences for the civilian, population revolts. The money will have on the civilian nothing of value, whole plucked to the bone shape.
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And what happens to the securities issued by Greece Euro in the pockets of citizens and businesses ?? Are they in one fell swoop worthless ?? Is it wise to not address these bills?
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Greece is not the problem at all, the EU has a problem with Greece.