The Final Countdown for the Eurozone

Thanks for the gif Valentin (http://gifmovie.tumblr.com/)

It’s been a common place to analyze how Greece will exit the Eurozone within a couple of months time, if an austerity- unfriendly government ends up being elected this Sunday.

The only questions that remain are a) how this procedure will be justified before the international public opinion and b) whether it will affect the rest of the problematic states positively or negatively.

As far as the first matter is concerned, legally it has not been foreseen within the International Treaties and therefore a state cannot be excluded from either the currency union or the European Union. This does not men it will not be put aside. It is more likely that the Greek Government will be forced to abandon the ship, instead of being legally thrown out by the others. Aas much as they’d wish they could, hence, learning for their mistakes, the new treaty about public finance of the states. This being the situation, the EU –IMF- EFSF will stop funding the Greek debt and the Greek Government will indeed have to find a new way to fund the needs of the state – never mind the external debts. This will either be pulled of by e third country loan, or by internal loan.

These two directions are a whole new issue, and this article is about the second question. Would you bet on Greece ‘s misfortune to be an example for reforms and austerity tolerance for other problematic countries, or will it cause an even harsher attack on them form the markets  and hedge funds, so much that it draws down Italy and even France by raising the cost of borrowing directly from the markets and send them – fatally – to the arms of the Troika?