It’s not often that a country of 11 million people decides
the fate of the entire world. But on Sunday the Greeks get that opportunity,
and although my statement does seem outlandish, it’s not far from the mark.
Many economists and political pundits are treating this as a referendum on Euro
membership; Greeks are faced with a choice: Vote SYRIZA and leave the Euro but
cut the austerity or vote for New Democracy or PASOK and stay in the Euro but
continue to suffer humiliating austerity. Not an easy choice considering the
Euro is supported by 80-90% of Greeks.
Although you would be forgiven for thinking so, the Greek economy is relatively
unimportant. It isn’t a large economy and most banks don’t have huge exposure
to it. But it’s the contagion effect, if Greece defaults then will fear spread
in the markets. Many banks will begin to default; other weak economies such as
Portugal, Ireland, Italy and Spain could collapse and require new bailouts.
This would through most of the world into a recession; Obama would lose all
hope of a re-election.
The weight of the world is on the shoulders of the Greeks,
and nobody knows what to do.
No comments:
Post a Comment