Greek Bankruptcy Good For Euro

Profession:Freemont Group

Over the past month the Greek debt crisis has been putting quite some pressure on the rate of the Euro. This does not seem justified, as a Greek default can only strengthen the Euro in the long run. The reason is simple: at the root of the Euro perils lies out of control government spending. What better way to return to discipline EMU member states than a bankruptcy of the most outrageous Euro member Greece?

Yet prominent European politicians still prefer to keep Greece afloat in spite of its third world performance. European banks are 'too exposed' and prone to fail when Greece defaults. That sounds severe, but the numbers to support this claim simply don't add up. EMU banks hold a total of only €53 billion in Greek bonds, €57 billion less than last years' Greek bailout fund. These banks receive high yields on these bonds as long as Greece does not default. In other words: EMU banks have a vested interest in maintaining the status quo.

We are also told that should Greece go bankrupt, their peril could 'contaminate' the other PIIGS. Interest levels would rise; PIIS governments will not be able to raise...

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