Greece and the Eurozone; better out than in?

In the past week, Europe has resembled something like  school playground. Due to David Cameron using his Veto last week, the French have lashed out with several, vindictive  and frankly, rather childish statements about the state of the British economy; despite the fact that  Angela Merkel pointed out that Britain still had an important role to play in helping to sort out the Eurozone Crisis. It’s worth pointing out I feel, that in a note of poetic irony, Standard & Poor are expected to downgrade the French credit rating within days, whilst Britain’s remains as stable as ever. There have been calls from many influential people, that to ensure the survival of the Eurozone, that Greece should be allowed to bow out gracefully, and with as much dignity as it can muster.

Is it Greece that needs the Euro, or does the Euro need Greece? (Photo from

There are many that see it as an inevitability, whilst to others it is the worst nightmare imaginable. Jim Leaviss of M&G argued that it would be the worst thing imaginable, and suggested that even Greece defaulting on it’s debt would be better than her leaving the Eurozone altogether. Leaviss went on to suggest that, if we thought we had seen it bad up until now, the subsequent run on the banks at the prospect that the Eurozone was breaking up would be hellish.

Let us suppose however that the great elected European powers accept that Greece is allowed to leave the single currency; rather like wildebeest in the Serengeti allowing some of the weaker members of the herd to get eaten by Lions, so the rest can escape. The Drachma is reinstated as the national currency, but as most people agree, it would be substantially devalued, with Forbes estimating that the drop would be about 60%. Admittedly this seems like a hell of a drop, and yes it is, but lets not forget, how much everything went up in price when the Euro came into effect as domestic currency less than a decade ago. It would mean that everything would then be incredibly cheap compared to other parts of Europe, personally I can foresee Greece having more tourists that it can handle. There will be scores of people desperate to get over there to snap up bargains; much like when you drive through the Pyrenees, you have to stop in Andorra, one would hope that the boost in tourism would help to kickstart the economy and stimulate growth. The more pessimistic members of the financial world, seem to predict a somewhat more anarchic view of the effects of Greece reverting back to the Drachma. Lines of people queuing up outside banks to get to their money, soaring prices and chaos followed by the a military coup and Greece descending down some Orwellian spiral to a kind of dystopian existence.

Leaviss argues that it is up to the European Central Bank to come to the rescue; by cutting interest rates and maintaining them at a low 0.5% and continuing to buy debt from the more impoverished Eurozone countries Leaviss suggests that this will stave off distaster for the time being. There is no way that Merkel, Sarkozy et al, will be able to turn around a decade of clearly seriously flawed fiscal policy overnight, but at least this might buy them some time to do a bit of damage control and possibily restore a bit of market confidence.

Personally I feel truly sorry for the Greeks, to stay in, or to leave, they seem to be dammed either way. Their economy is shot to pieces, their population are facing years and years of austerity to pay for their previous governments financial mismanagement, and to top it off, nobody seems to want to buy any of their national assets. There have been a few murmurs of interest from the Gulf states, but everybody is holding off until the question of whether Greece will stay with the Euro, has been answered. I don’t mean to sound smug in any way, but when you think about the herculean task that stands before Lucas Papademos one can’t help but feel relieved to be somewhat removed from the Euro and just a little bit comforted that Britain’s credit rating is as secure as it is. It only remains for me to wish you all the compliments of the season and to hope you all have a splendid time ringing in the New Year; 2012 promises to be an interesting one!


About matthewrdavis85

I have always had a passion for politics; in 2009 I graduated from Keele with a Masters in Diplomatic Studies and have actively supported the Conservative Party since 2005. In my spare time I love to cycle and write (although not at the same time), my first short story was published in September 2011; Beyond the Asylum is available on Amazon, or alternatively Google The Last Line UK. You can also follow me on Twitter @MatthewRDavis85 My gravitar is reproduced by kind permission of my talented photographer sister Amanda, of AJDavis Photography.

Posted on December 20, 2011, in Comment, Foreign Affairs, General and tagged , , , , , , , , , , , , . Bookmark the permalink. Leave a comment.

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