Friday, June 1, 2012

Eurozone Madness

The news seems ever ongoing and ever worsening from the eurozone, and perhaps more than any other subject area at the moment, attracts comments that are disingenuous - folk that are anti-EU make suggestions that they know will lead to only one thing - the break up of the eurozone and maybe even the EU.

One common suggestion is that Greece should leave the euro, and many suggest Greece would even be better off if it did.

Such statements are very simplistic readings of the situation, and I wonder if they are deliberately so because the people making them are ideologically predisposed against the euro.

Allowing countries to leave the euro would signal the end of the euro because of the precedent it would set - that countries can be forced out. When would it stop? Would even France be safe? The eurozone functioned pre-crisis very well because it was seen to be irrevocable, and credibly so. That meant an absence of speculation, something that has returned en masse now that the crisis has arrived.

Second, would Greece be better off outside? Its debt would be transferred into its new currency which would immediately depreciate, increasing the size of its debts significantly. That isn't going to help solve its problems any time soon...

1 comment:

  1. This Euro Zone madness is aired in radios days ago, until now. This is really a serious problem. If Greece separates from the Euro Zone, it is possible, that Greece will encounter economic problems. The Greeks should be prepared before these problems rise.

    By: exchange rates