What are the costs of a Greek exit from the euro? What policies sizzler breakfast buffet should be applied? | Economy Weblog
A month ago the German Finance Minister Wolfgang Schaeuble sizzler breakfast buffet said the euro zone bear no major problems Greece leaving the euro, as the system is now much stronger than two years ago, when the crisis of debt . Greece is now in a delicate situation. In the previous post this Gayle told us that the events of recent weeks and the response sizzler breakfast buffet of financial markets have increased the likelihood that Greece will leave the Eurozone. Greece is a country that is in its fifth year of recession, unruly, with a debt that may never pay, despite their cuts and bailouts, and can be forced to issue its own currency again. Many also believe sizzler breakfast buffet that Greece is a danger to the eurozone and a source of contagion that should sizzler breakfast buffet be isolated from other peripheral countries.
The Union Bank of Switzerland (UBS) estimated in a report - "The breakup of the euro: consequences" - which, for a eurozone country like Greece, the cost of abandoning the single currency sizzler breakfast buffet would be devastating and could reach 50% of its GDP. This cost is due to the high interest rates of the financing of the economy, including government and the private sector, as no one would lend money to the country at reasonable rates. As a result of the inability to pay debts denominated in euros, the new currency would suffer huge depreciation and rescue its banking sector would be very costly. In short, short term, state insolvency, corporate default, collapse of the banking system and growth difficulties.
But the cost would be equally high for the countries that remain in the euro, because it would have to rescue their banks they had large amounts of Greek debt. That is, the peripheral eurozone countries suffer the consequences of distrust of markets that can think if one goes can go other ("domino effect") and this would result in significant sizzler breakfast buffet increases in risk premia.
According to the analysis of UBS, if it was Germany that decided to jump ship euro, the German country also pay a high price, estimated between 20% and 25% in the first year, as a result of the suspension of payments of many businesses, the need to recapitalize the banking system and the appreciation of its currency with the consequent collapse of its exports.
Well despite the difficulties, problems and uncertainties that supodría the output of a euro country, however, many European citizens are frustrated by the behavior of Greece and would not mind to leave the euro.
No embago, as noted above, this Greek exit could cause great uncertainty about a possible chain reaction to other countries would generate a huge irrational volatility in capital markets. So the output of Greece should sizzler breakfast buffet be ordered, with a clear roadmap and "firewall" well defined by the European Commission, the European Central Bank and the IMF (the "troika") to avoid contagion to other countries.
This is to prevent a Greek exit from the euro would generate a situation of mistrust and contagion to other peripheral countries like Spain, Italy and Portugal, unlike Greece, are doing their homework. Again, be necessary, therefore, a forceful intervention by the European Central Bank to prevent the risk premium, for example the Spanish sizzler breakfast buffet 10-year bond exceed 300 basis points. The European Central Bank (ECB) would have to provide additional liquidity to buy government debt if finally confirmed that Greece leaves the euro zone to avoid volatility and contagion to other economies. Part of that "firewall" that the ECB would it provide liquidity to banks to deal with a potential run on deposits.
Europe ranging from indecision and lack of flexibility, has prolonged the agony of Greece and now also threatens the hopes of recovery in countries like Spain. So right now the bottom line for Spain is their membership of the euro and for that we must continue the reforms, explain well (education and information) sizzler breakfast buffet reforms already made and to be done and the results will be these refromas in terms of economic recovery. Because we must not forget that the growth path passes through fiscal austerity.
Late, inadequate and ineffective responses by eurozone leaders have turned the Greek crisis, which represents less than 2.5% of GDP in the Eurozone, in a storm in the financial markets that may end up not only with Spain and the rest periphery
A month ago the German Finance Minister Wolfgang Schaeuble sizzler breakfast buffet said the euro zone bear no major problems Greece leaving the euro, as the system is now much stronger than two years ago, when the crisis of debt . Greece is now in a delicate situation. In the previous post this Gayle told us that the events of recent weeks and the response sizzler breakfast buffet of financial markets have increased the likelihood that Greece will leave the Eurozone. Greece is a country that is in its fifth year of recession, unruly, with a debt that may never pay, despite their cuts and bailouts, and can be forced to issue its own currency again. Many also believe sizzler breakfast buffet that Greece is a danger to the eurozone and a source of contagion that should sizzler breakfast buffet be isolated from other peripheral countries.
The Union Bank of Switzerland (UBS) estimated in a report - "The breakup of the euro: consequences" - which, for a eurozone country like Greece, the cost of abandoning the single currency sizzler breakfast buffet would be devastating and could reach 50% of its GDP. This cost is due to the high interest rates of the financing of the economy, including government and the private sector, as no one would lend money to the country at reasonable rates. As a result of the inability to pay debts denominated in euros, the new currency would suffer huge depreciation and rescue its banking sector would be very costly. In short, short term, state insolvency, corporate default, collapse of the banking system and growth difficulties.
But the cost would be equally high for the countries that remain in the euro, because it would have to rescue their banks they had large amounts of Greek debt. That is, the peripheral eurozone countries suffer the consequences of distrust of markets that can think if one goes can go other ("domino effect") and this would result in significant sizzler breakfast buffet increases in risk premia.
According to the analysis of UBS, if it was Germany that decided to jump ship euro, the German country also pay a high price, estimated between 20% and 25% in the first year, as a result of the suspension of payments of many businesses, the need to recapitalize the banking system and the appreciation of its currency with the consequent collapse of its exports.
Well despite the difficulties, problems and uncertainties that supodría the output of a euro country, however, many European citizens are frustrated by the behavior of Greece and would not mind to leave the euro.
No embago, as noted above, this Greek exit could cause great uncertainty about a possible chain reaction to other countries would generate a huge irrational volatility in capital markets. So the output of Greece should sizzler breakfast buffet be ordered, with a clear roadmap and "firewall" well defined by the European Commission, the European Central Bank and the IMF (the "troika") to avoid contagion to other countries.
This is to prevent a Greek exit from the euro would generate a situation of mistrust and contagion to other peripheral countries like Spain, Italy and Portugal, unlike Greece, are doing their homework. Again, be necessary, therefore, a forceful intervention by the European Central Bank to prevent the risk premium, for example the Spanish sizzler breakfast buffet 10-year bond exceed 300 basis points. The European Central Bank (ECB) would have to provide additional liquidity to buy government debt if finally confirmed that Greece leaves the euro zone to avoid volatility and contagion to other economies. Part of that "firewall" that the ECB would it provide liquidity to banks to deal with a potential run on deposits.
Europe ranging from indecision and lack of flexibility, has prolonged the agony of Greece and now also threatens the hopes of recovery in countries like Spain. So right now the bottom line for Spain is their membership of the euro and for that we must continue the reforms, explain well (education and information) sizzler breakfast buffet reforms already made and to be done and the results will be these refromas in terms of economic recovery. Because we must not forget that the growth path passes through fiscal austerity.
Late, inadequate and ineffective responses by eurozone leaders have turned the Greek crisis, which represents less than 2.5% of GDP in the Eurozone, in a storm in the financial markets that may end up not only with Spain and the rest periphery