The dangers of a Greek exit from the eurozone far outweigh the positives -- especially in the first year. “Pulling out of the euro would almost certainly throw Greece at least temporarily back into a severe recession. The [currency] switchover itself would create huge uncertainty, because the euro was deliberately designed without a way of exiting,” says Elliott.
But if Greece were to exit the eurozone, there would also be negative psychological impacts. In the short term, euro member nations would be skeptical about the future value of euros, given the fact that one highly indebted country has withdrawn from that monetary union, which could lead to possible exits from Portugal, Spain and Italy. “The value of the euro has been a disaster for a lot of southern European countries, notably Greece, but also Spain, Portugal and Italy,” Gary Burtless, senior fellow for the Brookings Institution, says. “If Greece leaves, then the eurozone will have to wonder what it must also offer Spain, Portugal and Italy to make them willing to stay in.” The situation in Greece could be similar to Argentina in 2002, when it uncoupled from the U.S. dollar and adopted a new currency that was revalued. The immediate effect: Goods and services produced in Argentina became a lot cheaper for the rest of the world to buy. Argentina’s recovery was fairly rapid, and the country enjoyed a few years of exceptional economic growth, offsetting what had been some terrible years ahead of time. The difference between Greece and Argentina, however, is that although Argentina was pegged to the U.S. dollar, it was not part of the U.S. economy. “Greece is much further into the game of integration with the rest of the eurozone than Argentina was with the United States. The analogy holds for what to expect with Greece’s export sector and eventual return to growth, but the question of what Greece’s place in Europe would be after an exit is much more uncertain,” Adams says. full: http://www.ibtimes.com/greece-debt-crisis-2015-whats-so-bad-about-grexit-1814412 _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
