Greek Exit from the Eurozone would a ‘catastrophe’- former Greek PM

in International Business

Greek Exit from the Eurozone would a ‘catastrophe’- former Greek PM

Former Greek PM  George Papandreou said that a Greek exist from the Eurozone would be a “major catastrophe”.

According to him, the Euro is keeping Greece stable. Leading the Eurozone would mean a bank run, higher inflation, deep wage cuts and fall in GDP of more than 20%. It would be a “major catastrophe.”

He does not see the problem with the Greece. If Eurozone would be back on its feet with the exit Greece from the Eurozone, then Greece could easily be kicked out. However, the problem lies in the very structure of the Eurozone. Though it is the same currency, every Euro nation has its banking system, fiscal policy and labor and pension laws. The system is not unified thoroughly.

He called for common debt to be issued by eurozone members – so-called eurobonds – and for a financial transaction tax to raise revenues.

“Europe is not making the bold moves. The structures in Europe need to be more integrated and made stronger,” he said.

Meanwhile, outgoing World Bank president Robert Zoellick had warned that Europe faces a “Lehmans Moment”. He was referring to the collapse of the major US financial firm, Lehman Brother Holding Inc., that went bankrupt 2008 and marked the beginning of the financial crisis. Lehman was the fourth largest investment bank in the USA (behind Goldman Sachs, Morgan Stanely, and Merrill Lynch).

Mr Zoellick, who leaves his post at the end of this month, told the UK’s Observer newspaper that: “Europe may be able to muddle through but the risk is rising”.

“That could be a Lehmans moment if things are not properly handled.”

In another interview, he criticized European leaders for their lack of decisive action. He called for the European leaders to decide on one scheme no matter what. “It is no longer so much about which model they choose. They should just decide on one. Quickly”


Tags assigned to this article:
EurozoneGreeceLehmans momment

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