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Greek Deputy PM: Return to Drachma would mean rioting, suicides, army on the streets, disaster for t

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posted on Jun, 26 2011 @ 06:55 PM

Greece's Deputy Prime Minister Theodoros Pangalos has blasted suggestions that it would be better for his country to abandon the euro and return to the drachma as an "immense stupidity".

"Those who say this are extremely stupid. While they may be analysts, university professors or economists, saying that is an immense stupidity," Pangalos told daily Spanish newspaper El Mundo in an interview published Sunday.

Debt-wracked Greece has been told by European peers that it cannot hope to continue receiving aid from a 110-billion-euro rescue package agreed with the EU and the IMF last year without biting budget reforms and privatisations.

The Greek parliament will vote on an austerity package this week but some economists have argued that Athens needs to restructure its debt and leave the euro to become economically competitive again.

"Returning to the drachma would mean that on the following day banks would be surrounded by terrified people trying to withdraw their money, the army would have to protect them with tanks because there would not be enough police," said Pangalos.

"There would be riots everywhere, shops would be empty, some people would throw themselves out the window ... And it would also be a disaster for the entire European economy."

The austerity measures the Greek parliament will vote on later this week to keep the country's huge debt viable and persuade international creditors to extend additional assistance, are worth more than 28 billion euros ($40 billion) for the period 2011-2015.

Athens also intends to sell partial or full stakes in a host of state entities, aiming to raise 50 billion euros to reduce the overall Greek debt of more than 350 billion euros.

Greek Deputry PM blasts euro exit talk as 'immense stupidity'

Wow the potential outcome sounds like an apocalyptic disaster for Greece should the Greek parliament fail to vote in favour of the proposed austerity measures. But, the way I see it, I don’t think voting the proposal through is going to help much either. The situation in Greece is not viable. Many are set to lose out either way, including through austerity. Private industry also relies on people spending who are employed in government and public office positions. An economy that doesn’t have such huge debts could afford to cut back and suffer some losses to return a balanced budget. But I do not see an economy on the verge of defaulting can afford to do so. Austerity is clearly the better option than defaulting, but it will only buy time, it can’t save the shipwreck waiting to happen.

Further commentary is available at Zero Hedge.

Btw any fellow Australians reading, should note that Australia may not be immune to any Greek defaulting on its debt repayments, at least to our super funds. The authors contend that a Greek default may trigger yet another GFC which would have similar financial impacts and losses on Australian super funds should the fallout affect other Eurozone countries and their capacity to pay on their debt with a sudden surge in interest rates. May be a worse-case scenario but interesting reading...

THE dire situation in Greece has the potential to cause a second global financial crisis and we all need to factor in that possibility along with the impact of the fallout on our finances....

The European Union and the IMF have a finite amount of money to bail out countries. The fear is, if Greece defaults on its debts, the interest rate on loans to other PIIGS will soar to a point they could default and there won't be enough money to bail them all out.

It's a scary prospect. Yes, Europe is a long way from us, and we're more linked to the prosperity of China and other Asian nations, but we won't be immune from another global financial crisis.

Just like the last GFC, global share markets could crash, ours will follow and that will hit all our superannuation returns.

Banks globally are big investors in European government bonds. If some of those countries (such as the PIIGS) default on their debts, those bonds won't be repaid, the banks will suffer big losses and they'll tighten credit to customers.

This will cause another credit squeeze, which will hit all economies not a pretty prospect.The IMF and EU are determined to stop Greece triggering the fall of dominoes.

Let's hope they succeed. Follow it closely.

Greek mess may cause second GFC

posted on Jun, 26 2011 @ 11:26 PM
Hi fellow Australian.I agree that Australia is far from immune,I was actually warning a group of people yesterday about their super annuation.For the author of the last article, to state that there could be a second GFC is a bloody insult to our inteligents.We never ended the first one ! I have heard this so many times.If this was true based on the media alone we have already had something like 15 GFC's in the past 24 months.

It is sad indeed for our fellow brother's and sister's in Greece.We need to stand by them,not finacially but shoulder to shoulder with baseball bats! There can be no more prolonging the debt default.Pull the band aid off and let the chips fall where they may.This is comming for every Nation on Earth.Tanks with banks will be standard issue.I'll say it again this is comming for every nation on earth,that you can take to the bank and yeah I look forward to taking it to the bank!
edit on 26-6-2011 by 13th Zodiac because: (no reason given)


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