[While it'd be rather foolhardy to try to predict the precise shape of the things to come if Greece eventually defaults on loan repayment and exits the Eurozone - which is just not "possible" but looking rather "probable" right at this point of time, it is rather safe to assume that it cannot but have a strong negative impact on the economy of European Union and thereby would destabilise the global economy as a whole.
And, if that eventually comes to pass, it'd be rather foolish to expect that India will remain unruffled, to put it rather mildly. As a general rule, higher the level of integration of a country with the global economy, the greater will be the turbulence it is going to experience.] I/II. http://profit.ndtv.com/news/economy/article-india-says-still-to-draw-up-plan-to-deal-with-any-greek-fallout-776357 Government Says Still to Draw Up 'Firm Plan' To Deal With Greece Crisis Agencies | Updated On: June 29, 2015 15:38 (IST) Greece Crisis: People line up to withdraw cash from an ATM, on the island of Crete (Reuters) India is monitoring developments after the breakdown in talks between Greece and its creditors, but does not have a firm plan in place to deal with any significant fallout, Finance Secretary Rajiv Mehrishi said. The situation in Greece, he said, has no direct impact on India. Worries over Greece sparked a sell-off in emerging markets on Monday. In India, Sensex plunged over 2 per cent in early trade, before recovering to end 0.60 per cent lower. (Read:Sensex Pares Losses After Plunging 600 Points) "This is a dynamic and evolving situation. There is no firm plan that we can access," Mr Mehrishi told reporters. "Nobody can predict what the exact situation would be." (Read | Greece Crisis: Timeline of Important Events) The Finance secretary said the fallout from Greece would not have a direct impact on India, but flows would be a potential concern. "The Greece crisis does not have any effect directly on India. (But) interest rate may firm up in Europe. In case of firming up of interest rate in Europe, there can be outflow of capital from India," Mr Mehrishi said. (Read: Greece Shuts Banks, Limits Daily ATM Withdrawal to 60 Euros) "To the extent it affects the euro, there might be some indirect impact on India. If yields on euro bonds go up, then it might impact inflows and outflows from India," he said. The government, he said, is consulting the Reserve Bank of India to deal with the situation. RBI Governor Raghuram Rajan said last week he expected India's economy would be able to withstand any impact from the crisis in Greece thanks in part to its foreign exchange reserves, which reached a record high of $355.46 billion as of June 19. II. http://economictimes.indiatimes.com/markets/stocks/news/heres-why-are-global-markets-panicking-over-the-greece-crisis/articleshow/47843379.cms Here's why are global markets panicking over the Greece crisis 27 Jun, 2015, 05.17PM IST By Nitasha Shankar, Head of Research, YES Securities To understand why global markets are panicking over Greece crises, let us take a step back to take stock of the situation. As at the end of March 2015, Greece owes nearly Euro 312 bn of debt to various organizations. Nearly 41% of this is owed to ESFS. Another Euro 21 bn (about 7% of total) is owed to the IMF. To ECB, Greece owes around Euro 20 bn (about 6% of total). Loans from other Euro member nations make another 17-18% of total. All in all Greece owes a sizeable chunk of money to Euro zone countries with Germany and France nominally having the largest exposures to the debt. The repayment capability of Greece at the same time has also come down. The austerity measures imposed on the country as a condition for the bailout package has in turn put the economy under stress. This was one of the highlights of the new government's electoral manifesto, i.e., that they would renegotiate the terms of credit with the Euro zone creditors to lift some of these austerity measures. However the failure to reach an agreement with the recent round of discussions clearly indicates that the creditors are reluctant to accept any easing of austerity on the part of Greece. This brings us to the options for Greece and Euro zone going ahead. One option is for Greece to succumb to the creditors demand and get another lifeline of funds to sustain their operations. If this were to happen, the status quo remains and all the worries would be set to rest till the next payment becomes due. Given the huge stake that countries in the Euro zone, particularly Germany and France have in both the Greek debt as well as the future of the Euro zone, they would not want Greece to default and/or the zone to collapse or come under threat. The investors however are more concerned with the other options and that is the possibility of a debt default by Greece. One needs to understand that this would be a major bankruptcy after the Lehmann case. At that time the contagion effect that followed the Lehmann collapse had caught everyone by surprise which led to the meltdown in the global markets. Investors now are reliving the nightmare of 2008 when they look at Greece. They are fearful that a Greek default and in turn its exit could lead to a contagion effect. This in turn could result in a collapse of the financial system in Eurozone given the huge amounts owed to the Euro zone members and a possible dominoes effect in other economies particularly that of Spain and Italy, which are considerably larger than Greece and would cause greater harm to the GDP of the zone. A possible default and exit would result in a need to write off the quantum of deb that Greece defaults on which in turn would put the lending economies of which France and Germany are the largest lenders. This in turn could reverse any sign or hope of recovery of Euro zone. And this would hurt the exports to the zone from other countries thereby hurting overall economic growth. While these fears are certainly justified, however we believe that they are already priced in by the markets this time around. Having said this, there would be an immediate selloff in case of a default/exit but markets should recover post that. With regards to the possible contagion effect, talks and events following the possible default/exit is what everyone would be watching out for. Because more than Greece it is what happens in other countries like Spain and Italy, which are still fragile, is what matters more. As far as India is concerned, any sharp selloff in the global markets would certainly extend to our markets as well. However we are relatively in a sweet spot as compared to the other countries. There is an expectation of economic recovery driven by measures to strengthen infrastructure, smoothen out supply chain bottlenecks; all driven by the Government which is trying to come up and enact reforms that would be conducive to the economic and capex recovery. And as such the expected benefit of this recovery for corporate India is what is driving institutional investors' interest in the country. Therefore investor funds should return to the country and the markets over time. -- Peace Is Doable -- You received this message because you are subscribed to the Google Groups "Green Youth Movement" group. To unsubscribe from this group and stop receiving emails from it, send an email to [email protected]. To post to this group, send an email to [email protected]. Visit this group at http://groups.google.com/group/greenyouth. For more options, visit https://groups.google.com/d/optout.
