What a Grexit would look like
1 hour ago
July 01, 2015 10:22AM
VIDEO: Greece deadline passes without bailout deal
GREECE has become the first developed nation to default on an International Monetary Fund loan after the midnight deadline expired, with the country losing access to existing financing.
“I confirm that the SDR 1.2 billion repayment due by Greece to the IMF today has not been received,” said IMF spokesman Gerry Rice.
“We have informed our Executive Board that Greece is now in arrears and can only receive IMF financing once the arrears are cleared.
“I can also confirm that the IMF received a request today from the Greek authorities for an extension of Greece’s repayment obligation that fell due today, which will go to the IMF’s Executive Board in due course.”
The government was given until midnight (0800 AEST) to get its act together and pay back $2.33 billion (€1.6 billion) of the €325 billion it owes to the IMF.
After Greece made a last-ditch effort to extend its bailout, eurozone finance ministers decided in a teleconference late on Tuesday night that there was no way they could reach a deal before the deadline.
“It would be crazy to extend the program. So that cannot happen and will not happen,” said Dutch Finance Minister Jeroen Dijsselbloem.
The last country to default on an IMF loan was Zimbabwe in 2001.
Greece is now edging closer and closer to a situation never before seen in the eurozone. No more shared currency. No more eurozone.
The drachma — Greece’s former currency — could return and cut in half the worth of every euro saved by already struggling Greek citizens.
If Greece is forced out of the eurozone, there is no precedent for what will happen next.
But Greek Prime Minister Alex Tspiras admits the country cannot pay, and his 11th hour appeal to European finance ministers for yet another bailout package was rejected outright.
__________
Alexis Tsipras @tsipras_eu
We have justice on our side. If we can overcome fear, then there is nothing left to fear. @ErtSocial #ert #Greece
__________
Panicked citizens are living under economic lockdown with banks shut and withdrawals limited to €60 a day at ATMs, leading to a boom in sales of safes as people look for somewhere secure to store their cash.
This morning the Greek Finance Ministry said it would open 1000 banks across the country to allow pensioners to withdraw €120 per week to live on, however many ATMs around the capital remain empty.
With no money to pay, no more financial aid and a possible exit from the eurozone, experts are now speculating on the worst-case scenario facing Greece.
Thousands of people have turned out to protest in Athens, saying ‘no’ to the bail out offer from the EU. Picture: AFP. LOUISA GOULIAMAKI Source: AFP
WHAT HAPPENS NEXT?
If Greece does exit the euro, Greece would either need a new currency, or revert to its old one, the drachma, but the transition would be long and legally complex.
Economists say the value of the drachma might be about half that of the euro so the savings of Greek citizens could be worth half what they are today, even if they keep repaying debts in euros.
If Greeks vote against the package of reforms in Sunday’s referendum, the country could be forced to leave the eurozone. No country has ever left the shared currency, and there were never any plans put into place for such an event to occur. It is uncharted territory.
In the event Greece does leave the euro, the government would need to pay its bills by printing IOUs, which would become a parallel currency.
There is a precedent for this. In 2009, a bankrupt California began printing IOUs to pay taxpayers, vendors and local governments in lieu of cash.
How Greece would go about determining a rate of exchange for the new currency is entirely unclear. “If I had 100 euro in the bank when I went to sleep, I might wake up with 100 drachmas,” University of Sydney senior economics lecturer Mark Melatos said.
Currency traders watch markets in Seoul, South Korea. There is real fear the crisis could send shock waves through financial markets around the world. Picture: AP Photo/Ahn Young-joon. Source: AP
The problem, obviously, is those drachmas would be worth much less in real terms than euros — hence ordinary Greeks’ desperation to pull cash out while it’s still worth something.
About five billion euros ($A7.32 billion) were reportedly withdrawn in May alone.
Greece households are already stuffed full of cash, hidden in any place people can find. Euro notes are spent sparingly, and barter systems have begun cropping up in many communities.
“If a new currency was introduced, it would surely be worth much less than half the euro. The person in the best position is someone with a whole heap of euros sitting in their pocket,” Dr Melatos said.
How long it would take the real exchange rate to stabilise is again unclear, as there are very few precedents. “This doesn’t happen very often, and that’s part of the problem. It’s very rare that a country switches currencies, which is what’s causing all the fear.”
There is also the risk of inflation of the new currency. Petrol, for example, would become very expensive due to the cost of oil imports. However, the lower exchange rate could also help to restart the country’s economy.
“There would be a short-term shock but it could actually be quite good for Greece, it would suddenly become a very low-cost place and that would be good for its shipping and tourism,” UNSW economist Tim Harcourt said.
In the long term, many economists agree that moving to its own currency would be the best thing for Greece. But the process would be extremely painful.
“All the options are bad, but the best option is probably to leave and have their own currency,” Dr Melatos said.
“As far as I can tell, the debt can’t be repaid, at least not in full, so they may as well default as you would in a normal bankruptcy.
“Sure it will be a lot of pain in the short term, but the alternative would have required other euro countries to give even more money to Greece in perpetuity.”
READ MORE: http://www.news.com.au/finance/economy/what-a-grexit-would-look-like/story-e6frflo9-1227422412614
***
Chân thành cám ơn Quý Anh Chị ghé thăm "conbenho Nguyễn Hoài Trang Blog".
Xin được lắng nghe ý kiến chia sẻ của Quý Anh Chị trực tiếp tại Diễn Đàn Paltalk: 1Latdo Tapdoan Vietgian CSVN Phanquoc Bannuoc .
Kính chúc Sức Khỏe Quý Anh Chị .
conbenho
Tiểu Muội quantu
Nguyễn Hoài Trang
01072015
___________
Cộng sản Việt Nam là TỘI ÁC
Bao che, dung dưỡng TỘI ÁC là ĐỒNG LÕA với TỘI ÁC
No comments:
Post a Comment