Why Greece Should Stay in the EuroZone (user search)
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  Why Greece Should Stay in the EuroZone (search mode)
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Author Topic: Why Greece Should Stay in the EuroZone  (Read 1119 times)
Beet
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« on: May 12, 2012, 06:55:09 PM »

"Opinion polls show that 70% of Greeks want to remain part of the eurozone. Only the parties of the extreme left and right want it to exit. Four-fifths voted for parties that would prefer to keep Greece in, although their views on the price to be paid to achieve that goal differ.

It is not in the interests of either Greece or the rest of the eurozone to reinstate the drachma. An exit from the euro would lead to a run on the banks and the collapse of the Greek banking system. If Greece was shut out of international money markets, the temptation would be to meet the government deficit through printing money, leading to rapid inflation. People's savings would be wiped out. And an effective devaluation might do little for Greece's balance of payments anyway, except possibly through tourism. Poverty would become increasingly widespread."

http://www.guardian.co.uk/business/2012/may/13/greece-must-stay-eurozone

If Germany doesn't want to offer any more aid to Greece - that's fine. But keep Greece in the euro zone.
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Beet
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Posts: 28,916


« Reply #1 on: May 12, 2012, 11:09:30 PM »

Well the last default didn't lead to a run on the banks.

The banks can continue to be supported through the TARGET2 system. Regardless, it's terribly irresponsible for some Greek parties to be promising something to make the Greeks think they can get more than they really can, that the situation is not as bad as it really is.
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Beet
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Posts: 28,916


« Reply #2 on: May 13, 2012, 12:15:02 PM »

Why, exactly, should the Greek banks be supported in that case? I mean, from the standpoint of the other European countries?

Simple man, contagion. The other European countries' own banks are the ultimate target here. It's always easier to dam the water in one place than in 100 places.
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