Editor's Blog12 mins ago
Greek Defaulting on its Loans
Would it be cheaper for the international community to let the Greeks default so they can revert back to the Drachma and at the same time pay back the banks you have loans with them? So in other words money destined to be given to the Greeks would instead be diverted to other countries who have lent them money.
To keep bailing out the Greeks will not work as the population there do not want any restrictions and so creates a vicious cycle.
To keep bailing out the Greeks will not work as the population there do not want any restrictions and so creates a vicious cycle.
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If Greece defaults, several major French banks will go under unless the French government steps in to save them.
If the French government does act it will massively increase their sovereign debt which, in turn, will result in the collapse of both their own credit-rating and that of the European bail-out fund. The result would be the collapse of world stock markets due to financial uncertainty, leading to a decade or more of world-wide recession (with millions of job losses).
If the French government lets their banks fail, it will lead to banks ceasing to lend to each other (as happened in 2008) due to the fear that other banks, in other countries, might also collapse. (I've cited France here as the country which might suffer most from a Greek default but many other countries, and their banks, would be affected as well). That would also lead to worldwide recession.
The world (and not just the EU or the Eurozone) simply can't afford to allow Greece to default. The risks are far too great.
Chris
If the French government does act it will massively increase their sovereign debt which, in turn, will result in the collapse of both their own credit-rating and that of the European bail-out fund. The result would be the collapse of world stock markets due to financial uncertainty, leading to a decade or more of world-wide recession (with millions of job losses).
If the French government lets their banks fail, it will lead to banks ceasing to lend to each other (as happened in 2008) due to the fear that other banks, in other countries, might also collapse. (I've cited France here as the country which might suffer most from a Greek default but many other countries, and their banks, would be affected as well). That would also lead to worldwide recession.
The world (and not just the EU or the Eurozone) simply can't afford to allow Greece to default. The risks are far too great.
Chris
Not only the French banks
the one thing (I hope) we learnt from the last banking crisis is that the banks all lend each other money.
Who knows what sort of a stake UK financial institutions have in French and German Banks.
On a purely selfish note - right now the French and Germans are bailing out Greece if French or German financial institutions go under we could be bailing out our banks again because they've leant to them!
Still only 7 years 9 months before Osbourne splits the casino banking from the retail eh?
the one thing (I hope) we learnt from the last banking crisis is that the banks all lend each other money.
Who knows what sort of a stake UK financial institutions have in French and German Banks.
On a purely selfish note - right now the French and Germans are bailing out Greece if French or German financial institutions go under we could be bailing out our banks again because they've leant to them!
Still only 7 years 9 months before Osbourne splits the casino banking from the retail eh?
If Greece defaulted Europe would forfeit approx £52bn of unpaid loans. Greece was given a bailout loan of £110bn last year which is insufficient to keep it afloat and many more loans are required.
Surely that £110bn would have been better spent in repaying the European banks for a Greek loan default and leaving the Euro?
http://www.moneyweek....nally-goes-bust-54217
Surely that £110bn would have been better spent in repaying the European banks for a Greek loan default and leaving the Euro?
http://www.moneyweek....nally-goes-bust-54217
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