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What would have happened if Greece has threatened with default?

Why won't Europe let Greece default?

  • I've been thinking about this whole Greek default thing and what its effects would be. The commonly held belief among Europeans is that a default would equal the end of the euro. But I just can't see how we would get from a default to the end of the common currency? As an article on Bloomberg also points out "U.S. states and local governments have defaulted on dollar debts", and yet the dollar still exists. (http://www.bloomberg.com/news/2011-12-22/bad-ideas-worsen-europe-s-debt-meltdown-commentary-by-john-h-cochrane.html) I started thinking about what would happen if Greece defaulted: a lot of investors (mostly Greek) would lose a lot of money, because their previously low-risk investments in Greek bonds would be lost. This would probably be very bad for Greek banks, funds, companies and even the people (who - through the banks at least - are also at risk). Probably any foreign investors (who made the mistake of not diversifying enough) would lose a lot of money. And any trade partners of Greece would see trade with Greece decline. Probably, the cost of debt would also rise in countries that are in a similar situation to Greece such as Italy. And that's cool. It wouldn't be pretty, but how would this lead to the end of the euro?! It would not in my opinion. So why won't Europe let Greece default? They can't keep bailing 'em out for ever. And a default would be bad on the economy, but mostly on the Greek economy. It is the only solution that is sustainable in the long run. And the euro would not end because of it. Or is there something I'm missing here?

  • Answer:

    The Greeks have accepted the condition of the community,and will behave more rational after learning that the cost of being kicked out is unaffordable,even when the kick-out thing is not in the treaties still

Daa-yum at Yahoo! Answers Visit the source

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Because of the Euro, period. Cash flow and trade balances. Many, and me being one of them, believe that the Euro was an ignorant idea. It was like giving five year old's the vote.

WACO

To start with,,,US has not defaulted ion dollar, thay simply ask the lenders curtly to go to marker to encash their bonds and lenders thought US has gone bankrupt....they expect US to respect them which is an idiotic dream. Bonds are sold by auction, so if Arabs and Chinese don't buy...Germans and scandinavians will buy ! Then, in absence of gold....USD is in direct competition with Euro and few can appreciate that rise of dollar is by fall of Greece . wow!!! because, everyone says fall of Greece is bad for Euro... that's another idiotic prediction. I sit on the branch...you cling to it, i do not pull you up , so if you fall down - better for me. Isn't it ? IMF saved economies but those were dormant and closed ones.Neither IMF/WB nor EU have any mechanism to save speculatively - unproductively grown economies ( and what does that mean ?). These are the woes of US and others - on the edge greats ! Greeks are being stupidly crook or crookedly stupid in expecting to recover by bail -outs from EU partners. One gambler lending another on the casino table ! The sooner Greeks turn communists , the better for them. but, people are no more in decision maker's chair. The western capitalist set up should allow greece to go communistj, but they won't - Greece will be invaded immediately. I think Greeks know this - so they are stupidly crooked.

Mukesch Kaley

I support what the guy above said. In addition the euro was meant to maintain a low fiscal deficit which now obviously doesn't hold due to the recession and bailouts, so if Greece was to leave their would be advantages like a weaker currency to promote growth but also there would be massive interest rates held against greek borrowing due to their previous inability to pay. If one country can fall into trouble and leave then I don't see what will then stop others from leaving until all that's left are the financially secure like Germany and a few of the smaller ones. Essentially the euro area benefits countries like germany and the smaller ones that would otherwise be levied with high trading costs. If the number of me?bers falls then so would the benefits to all

Zeeshan

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