So it is now, almost, a certainty that Greece will drop the euro and revert back to drachma. The first of many countries that will dump the currency over the next months and years, the millions that have been ploughed into the country in order to prop up the euro will be written off, adding more cost to the tax payers of Europe.
Greece needs years not months to sort itself out. Doctors unpaid, schools without books, taxes uncollected – Greece is in chaos, the speed with which it descended is shocking.
Those in power struggle to justify their positions and the government, a recent comment from Greece’s foreign minister complaining that the country’s economic crisis is being made worse by the “negative stereotyping” of his country. He has a point there is a negative image, but so, too, unfortunately, do the country’s critics.
While the world’s governments worry about whether Greece will default on its debts, a form of internal default is already underway as the government runs out of cash.
Other European countries are now taking the threat of the same happening in their country extremely seriously. The stock they invested in the bail out plan has come back to bite them on their derrière.
A Greek exit from the single currency threatens to sink Britain into a second recession which could be equal in ferocity to the record postwar slump of 2008-09.
The head of the UK’s OBR said the deepening crisis in the Eurozone could force him to tear up his forecasts, made only two months ago, that Britain would post modest growth of 0.8% this year. “The concern is that you end up with an outcome in the Eurozone that creates the same sort of structural difficulties in the financial system and in the economy that we saw in the past recession, and that has consequences both for hitting economic activity in the economy, but also its underlying potential,” said Chote.
With economic output in the UK still 4% below its peak level when the recession began in early 2008, the prime minister and the governor of the Bank of England, Sir Mervyn King, have expressed concern in recent days about the vulnerability of Britain to the Eurozone.
Mr Chote commented that he was particularly concerned about the possibility that a second deep recession would leave permanent scars. “That means not just that the economy weakens and then strengthens again – it goes into a hole and comes out – but that you go down and you never quite get back up to where you started.”
Greece’s caretaker prime minister, Panagiotis Pikramenos, said the German chancellor, Angela Merkel, had suggested in a phone call to the Greek president, Karolos Papoulias, on Friday that Greece hold a referendum on its continued membership of the single currency alongside next month’s elections, in an apparent attempt to encourage voters to back mainstream parties who support the current austerity program.
The German government said that no suggestion of the kind had been made. But the Greek government was insistent, and said that Pikramenos had rejected the suggestion because he does not have the power to call a referendum.
Analysts at Deutsche Bank predicted that the weak state of Ireland’s banks could result in the former Celtic tiger requiring a second bailout, and in Spain there were reports that the government would call in Goldman Sachs to help sort out its banks after 16 suffered credit downgrades on Thursday.
I think it is a safe bet that all those living in the Eurozone should be taking action and making plans to protect themselves from the complete collapse looming around corner. There have already been several runs on the banks and the fiat currency that is the euro will continue to plummet in value.
Let us hope that Europeans do not suffer excessively in this time of change, may they group together support each other and make those responsible for this crash answer for their crimes.