On Line Opinion is a not-for-profit publication and relies on the generosity of its sponsors, editors and contributors. If you would like to help, contact us.
___________

Syndicate
RSS/XML

Planning for Greek default

By Michael Knox - posted Thursday, 18 June 2015

If agreement is not reached for a debt reduction, then Greece would default on all of its debt to the Euro Group. The Greek Central Bank would then create a new currency and provide reserves in that new currency to the Greek banks. When the government was satisfied that the banks had been adequately recapitalised, then the banks would re-open and begin business again.

Conclusion

The European Union is a confederacy masquerading as a federation. The major symbol of this pretend federation is a single currency. History tells us that a confederacy is prone to political dissention and civil war.

Agreement to solve the crisis in Greece needs to be found quickly. Should it not be found, the results will be far more than economic.

The shock to the stockmarket will be shortlived. The shock to the structure and the credibility of the European Union will live for many years.

Pages:
‹
1
Page 2
›
All

This article was first published in Morgan's Economic Strategy.

DISCLAIMER

The information contained in this report is provided to you by Morgans Financial Limited as general advice only, and is made without consideration of an individual's relevant personal circumstances. Morgans Financial Limited ABN 49 010 669 726, its related bodies corporate, directors and officers, employees, authorised representatives and agents ("Morgans") do not accept any liability for any loss or damage arising from or in connection with any action taken or not taken on the basis of information contained in this report, or for any errors or omissions contained within. It is recommended that any persons who wish to act upon this report consult with their Morgans investment adviser before doing so. Those acting upon such information without advice do so entirely at their own risk.

This report was prepared as private communication to clients of Morgans and is not intended for public circulation, publication or for use by any third party. The contents of this report may not be reproduced in whole or in part without the prior written consent of Morgans. While this report is based on information from sources which Morgans believes are reliable, its accuracy and completeness cannot be guaranteed. Any opinions expressed reflect Morgans judgement at this date and are subject to change. Morgans is under no obligation to provide revised assessments in the event of changed circumstances. This report does not constitute an offer or invitation to purchase any securities and should not be relied upon in connection with any contract or commitment whatsoever.