If any of you are still having trouble with understanding the situation in Greece right now, this video does a fantastic job explaining it all.
In short, we all know that Greece is in a very, very bad way right now. With their first debt repayment looming this summer, many of Greece's creditors are worried that they won't be able to make payment. Greece has already received two bailout packages, totaling 345 billion dollars. Many believe that Greece will need a third. But its creditors are very hesitant, and rightly so. The creditors aren't likely to give Greece a third bailout, especially if it doesn't take drastic measures and reform its policies to start trying to pay back their debt. In January, Greece elected a new leader, who was popular, due to his anti-austerity measures. To many of Greece's creditors, this was a step in the wrong direction.
If Greece does default, it will likely revert to its old currency, the drachma, which will be incredibly deflated, causing prices to soar, and this has many citizens worried.
Greece is between a rock and a hard spot. To me, it seems to be more of a matter when, not if, Greece will default. The more I've learned from this class, the more the idea of Greece defaulting and leaving the eurozone scares me. What do you guys think? Is the wounded analogy animal accurate? Should Greece just be put out of its misery? Is there any chance of getting out of this fiasco?
The goal of solidarity in the Eurozone has obviously failed. I agree that it's a matter of when and not if. Unfortunately both options are bad, Greece staying and Greece leaving. Shelby's wounded animal theory is all too real. Wolf talked about this a lot in his book, but I'm still left unsure of what is better to do now between Greece leaving or stay. But like you said, I'm more and more scared of what could happen if the country does leave.
ReplyDeleteWe read last week that the financial crisis cost the world about as much as a world war would. In that context, Greece is one of the victims.
ReplyDeleteThe same amount as a world war... Wow, this just goes to show how important it is to do everything possible to avoid another financial crisis. The main thing we as the people can do is first, be financially responsible and live within our means and second, promote and fight for more regulation within our financial systems. It still is unfathomable to me that we allow banks to lend out 97% of the money deposited having them keep only 3% of liquid cash on hand.
DeleteI agree with Cameron that is a matter of time that Greece will default on payments and leaves the EU. In addition, when Greece leaves the EU, it will be an "bad divorce" as described in Wolf's book. I think that banks should consider the worst possibility and take measures to ensure financial stability when Greece does leave the EU
ReplyDeleteI agree with Veeral in that banks should begin to prepare for the worst situation. I also agree that it seems to be a matter of when and not if Greece will leave the Eurozone. Wolf discusses that whether a country leaves the Eurozone in a civilized manner or not, the long-term results will be the same but I have to believe that how Greece leaves the Eurozone will make a difference in how it effects the country and the rest of the Eurozone.
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ReplyDeleteI do not think there is any chance of Greece or the Euro Zone getting out of this fiasco. I also agree that it is a matter of when, not if Greece will default. Taking this class has also instilled a fear in me about how detrimental Greece's default will be to the Greek economy and the Euro Zone. I agree with Bronte and Veeral that the banks, Greece, and the Euro Zone should be preparing for the worst possible outcome.
ReplyDeleteI recently read somewhere that a Greece exit would devalue the Euro by 50%, essentially eradicating the currency and leaving the world in a whole lot of trouble. I don't know if there is a good way to get out of this situation. It is almost picking the lesser of two evil. I would start preparing for the exit, but I feel that getting rid of any security related to the Eurozone would start the decline that the Eurozone is bound to see. In that sense it is tough to know what to do.
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