|
I doubt EU would allow it to default. Would be too big blow to the Super Europe project, too much losses on De and Fr banks, exposed to Greek loans. After all the task is to squeeze from Greece as much as possible, stripe it off its assets and give the assets to multinational corporations and investment banks.
If they do default:
- Greece will have to ditch Euro and return to Drachma, tie all the internal state expenses, such as pensions, police, army and other state worker wages etc to Drakhma, convert Euro deposits in banks to Drachma deposits
- Temporary capital controls, so people would not be able to wire Euros from Greek banks to another countries
- Devaluation of Drachma, they will exchange Euro to Drachma 1:1 while the capital controls is on, then, after the process is done Drakhma will devalue 1:2-1:10 to Euro, along with all the nominated in Drakhma wages and internal debts. Further innflation, probably up to 2 digits/year for a couple of years.
- Imports will get too expensive, this should prop up domestic production. Greece produces enough food, so there should not be hunger.
- Exports will be more profitable (wages are lower), including tourism, where hotel prices would be still nominated in Euro.
- This would allow Greece to balance its books somehow and get some investment - it would be more profitable to do stuff in Greece as wages would be lower than in Eurozone. In a few years they will be ok, just like Iceland is now, who got through banks bancrupcy a few years ago. But Icelend had its own currency.
- EU will try to actively punish Greece further, as much as possible, to teach a lesson to other financially weaker EU states, such as ES or PT, who may follow suit if Greece will get well. How well - it would depend if Greece could get some initial money and investment support from elsewhere outside of EU.
- If Greece will be ok, I'd expect Spain to follow the Greece. Especially because it looks like that spanish recovery is a fake to make people not vote for Podemos this autumn, and the true state of spanish economy would be revealed after the elections, next winter.
|