At 14:20 03/06/2012, Ed wrote:
There seemed to be some agreement yesterday that exit from the EU by Greece and perhaps others like Spain and Italy was inevitable.
(KH) I'm inclined to think so -- whereas (from what you write below) you don't think so. Futurework appears to be as divided as the hundreds of traders and investors on Bloomberg or economists in the press. What both Eurosceptics and Euro officials are now united about (the latter only the course of the last week) is that the Eurozone is very fragile. (The EC President said "very, very, very fragile" two days ago!)
(EW) But is it really? Greece, Spain and a few other countries have huge debts -- but debts that are denominated in Euros. It is highly unlikely that creditors would accept repayment in far less stable currencies like the drachma or the peseta, and default by some of the larger EU debtors could wreak havoc with the international banking system.
(KH) True, but they'll only scream about it before the event. If a country does go bust (and in this case leaves the Eurozone) then it's a "debtor's market". They'll call the tune to extend repayments over a great many years, just as Germany was able to after both World Wars. (America has only recently been paid off for the debts of European countries after WWII.)
Exit from the EU is, IMHO, most unlikely unless someone steps in and provides the kind of bailout supports needed. Perhaps the IMF or, as Barry suggested, Russia? For a countries like Greece or Spain, would being beholden to Russia be better than being under Germany's thumb?
The IMF certainly can't (Christine has been trying for months), Russia wouldn't (criminal oligarchs being in control and not in any way internationally minded) and China has already said it won't bail out the Eurozone.
Keith
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Keith Hudson, Saltford, England http://allisstatus.wordpress.com
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