1 Comment
  1. David Lazarus says

    Greece is the test case for any solution. If Greece is pushed out of the euro then the prospects for Spain and the rest of the periphery deteriorate significantly. Since the Greeks do not want to leave they will only be forced out under duress. The problem is the debts. Greece along with its banks might have to default on all bonds and external debts. Without interest payments the Greek fiscal position could improve considerably. There could be tax rises which fill the gap. Further cuts will only push the country to the extreme, and that could lead anywhere. If the fiscal deficit can be eliminated by debt write offs then it will end the crisis much more rapidly. Then EU restructuring grants will allow recovery. Though fire sales and forced sales will be treated as theft and eventually there will be repercussions from sovereigns that have crown jewels transferred to overseas buyers.

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