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Much has been in the media about the prospects of a Greek exit from the Eurozone and if it could lead to other countries following.

Here are some excerpts:

As Greece Goes, So Goes Spain, Italy

Deutsche Welle  

Panos Kammenos, Greece’s defense minister, spoke to German newspaper “Bild” on Saturday, saying his country’s leaving the euro could precede an exit by Italy and Spain, followed by Germany in the future.

“If Greece explodes, Spain and Italy will be next and then at some point, Germany. We therefore need to find a way within the eurozone, but this way cannot be that the Greeks keep on having to pay,” Kammenos told Bild.

Talking to Bild, Kammenos warned that his country would not take any more refugees in case of an exit from the eurozone, potentially creating a refugee crisis at Europe’s frontiers. He also said his country was facing severe problems after the EU and the US imposed sanctions on Russia following its alleged role in the Ukraine war.

European officials meanwhile criticized Athens’ attitude. “In Greece, too much blame for Greece’s problems is laid outside Greece and Germany is now the preferred victim,” Eurogroup chief and Dutch Finance Minister Jeroen Dijsselbloem told Dutch state television NOS.

EU Commission chief Jean Claude Juncker, however, pleaded for a breakthrough, saying he did not want a failure and would like Europeans to stick together.

If Greece Leaves Eurozone, Spain and Italy Would Follow

Forbes – Tim Worstall

At least that’s the claim from the Greek Defence Minister, Panos Kammenos, that if Greece were to leave the euro as the result of some failure of the debt renegotiation talks than Spain and Italy would follow out of the common currency. And in the end so would Germany. It’s certainly a possible ending to such a Grexit although it would probably be better if Germany were to leave the euro first.

As I’ve been saying for some time now the biggest threat to the continuance of the euro is not that Greece might leave, but that it might leave and then thrive.

At which point people in Italy will indeed be asking, well, why do we have to suffer all this pain when we could just bring back the lira? And it is Italy that is really suffering most from the euro of those two countries mentioned, Italy and Spain.

Spain had a huge property boom and then a collapse: yes, largely caused by entirely inappropriate interest rates as a result of being in the euro.

But they have also largely done the structural reforms that were necessary to recover from that disaster. It isn’t actually obvious that Spain would benefit all that much from not being in the euro. Italy however is another matter.

It’s running a primary surplus, most government debt is owed domestically, yet the low growth and deflation that the euro is causing are leading it to the edges of an irreversible debt spiral.

The Economic Opportunity of Greece’s Exit

The Gulf Times – Alberto Bagnai, Brigitte Granville, Peter Oppenheimer, and Antoni Soy/Tilton

The first sentence of the 1957 Treaty of Rome – the founding document of what would eventually become the European Union – calls for “an ever-closer union among the peoples of Europe”. Recently, however, that ideal has come under threat, undermined by its own political elite, which adopted a common currency while entirely neglecting the underlying fault lines.

Today, those cracks have been exposed – and widened – by the seemingly never-ending Greek crisis. And nowhere are they more evident than in Greece’s relationship with the International Monetary Fund (IMF).

The single worst outcome of the current negotiations would be Greece’s submission to its creditors’ demands, with few concessions in return. Such a result would fuel greater public support for anti-EU parties and movements elsewhere, and would amount to a missed opportunity for Greece and Europe.

That opportunity is default and exit from the eurozone, which would allow Greece to begin correcting past mistakes and putting its economy on the path to recovery and sustainable growth.

At that point, the EU would be wise to follow suit, by unravelling the currency union and providing debt reduction for its most distressed economies. Only then can the EU’s founding ideals be realised.

 

 

Source: The National Herald
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