Thursday, July 9, 2015

If Greece Exits the European Union...

For the European Union, Greece, mired in debt, is very similar to a company with a losing operating division that is dragging down corporate profits.  Even a not-so-smart CEO would divest themselves of that division.  With Greece voting "no" on austerity programs to get themselves out of debt, the European Union (EU) probably has no other choice but to say "ta ta" to Greece and eject them from the free-market trade advantages of the "Union" and its common currency.  This, rather than keep pouring money (loans) down a black hole of a country that can't get its own finances in order.

If Greece does return to its former currency, the drachma, its heavy debt will literally make it worthless in any trade with other countries.  Any imported products that Greeks are incapable of producing or making themselves,will be priced through the roof. Inflation will be rampant and there will be severe shortages that are aggravated by hoarding. Don't forget, Greece's top import is motor fuels.  What if prices are triple or more than what they are today?  For sure, unemployment will also soar.

If the Greeks think they have it bad now with imposed austerity, just wait until they exit the European Union.

References:

No! Greek vote shocks Europe - Jul. 5, 2015 - CNN Money: http://money.cnn.com/2015/07/05/news/economy/greece-crisis-referendum-results/

Greek Imports: http://www.tradingeconomics.com/greece/imports


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