polgara
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I suspect not. The new drachma would be worthless, and Greece would not be able to tap international credit markets. So how exactly would they pay for basic things like... fuel. Without fuel, the country cant run.. it is as simple as that. Add to that food and other things that the Greeks import. Car parts.. suddenly getting your car fixed goes up several hundred pro cent.. that is if you can afford buying gasoline of course.
Now the argument for the pro-Grexit people would be that, the Greek exports would become cheap.. yea that is true, but at the same time the imports would become extremely expensive. So only things produced in Greece would be affordable to locals, and this can cause problems in the short run. Also as someone above pointed out, Greece does not have a big export business. This can of course grow due its cheapness, but that takes time.. something that Greece does not have.
Another argument for the pro-Grexit people is that, yes but tourist would flock to Greece because it is so cheap. This is true, but would people really want to go to Greece, a country in social upheaval? Not to mention.. remember the first point.. fuel? How fun is it to be in a country where the power goes out? I mean there are cheap places to go in the Balkans, and yet you dont really see Romania and Bulgaria as hotspots for tourists do you? Now Greece has history and is historically a tourist hotspot, but we have seen how tourism has suffered in 2009-2012.. it has picked up some what, but no where near as it should have and suddenly because they have a new currency then it should explode? I dont think so.
But the fundamental problem for Greece is that just because they make a new currency, this does not mean that they dont still owe all that money away... they do. So you will see lawsuits in many countries going after Greek assets abroad.. we have seen that with Iran and Argentina. And then there is of course all the deposits in Greece.. they will be converted to the new currency, but chances are that the loans that locals have will still be in Euros... which causes even bigger problems. You have savings and income in New Drachma that is worthless, but you need to pay your mortgage in Euros. We saw what that did in Iceland.. 25% of the home owners over night went belly up.
So the argument for a New Drachma all boils down to one thing.. the ability to print money and pay locals in that money.. they cant buy anything with it, but at least they are getting paid right?
Greetings, PeteEU. :2wave:
Excellent post! :thumbs: I wasn't thinking as far ahead as you are, and reading your post was like opening a window on possible future problems for Greece. :shock: Focusing only on tourism, the recent ISIS massacre of vacationers in Tunisia is bound to cool tourism in many places around the globe, Greece included. Poor little Greece doesn't have much to look forward to, do they? They're damned if they do, and damned if they don't, and that's so sad! I did see an article on Yahoo that people are withdrawing all the money they can from their ATMs at the banks, even running some of them bone dry, so they are trying to cope with what's happening the only way they can. That's a short term thing, though - what's going to happen when all that money is spent? *shaking head in pity for the people of Greece*