Dally wrote:
It will be interesting to see how it pans out.
I would expect that the Eurozone's leadership will have by now developed a Plan B (that they will not want to implement) to let Greece leave. If that happens I fear the Greek people will suffer even more hardship than they have to date in the short to medium term. I do not think a military coup can be discounted at some point.
If Greece does leave in a relatively orderly way it will probably over time improve its lot as its currency will be very weak and so it should be able to export, attract mass tourism, etc.
All we are seeing and will continue to see is member states of the EU that have been heavily subsidised have drops in living standards because fundamentally their economies are weak compared with Germany who effectively dictate interest rates. So, in effect the EU serves no purpose.
When the Greeks got the bailout they had to agree to be ruled economically by the troika (European Commission, International Monetary Fund and European Central Bank) and so embarked on a Austerity program and the usual
massive selling off of state assets. The IMF predicted after the Greek economy had crashed to the extent it had, they would as a result of the measures imposed experience a 25% (yes twenty five percent) growth in the economy as it bounced back from the very bottom of the pit.
It has not happened. Geek youth unemployment is at 60% for example. It remains a basket case.
So all the Austerity imposed has failed yet the Greek people have suffered the consequences. They took the medicine but there is no cure in sight. Their living standards have already dropped through the floor.
So given the bailout package has not revived the economy is it any surprise they have voted the way they have?
What the new Greek government has said is paying the debt back in full is unrealistic. They want to halve it and stay in the Euro. That will obviously go down like a lead balloon as I believe the Germans lent 22bn Euros as part of the 110bn package but really this is small beer and writing half that off does not seem to be unrealistic, especially since they have made a big profit as a direct result of the Greek crisis anyway.
As to Germany, they profit massively from this. German companies have bought up a lot of Greek state owned assets. The bailout package earns Germany interest on the loans and as you mentioned there are low interest rates which means Germany's own debt is cheap (but this is not new, the Euro has been undervalued for years as weaker economies keep it low).
