Fear in the markets came today as investors and economists worried that Greece could be closer to defaulting on its debt, analysts say they don't believe the U.S. can be insulated from this stress on European banks. Economists are already worried that the U.S. is headed into a recession and worry Europe could be the tipping point.
In my opinion I don't think Greece will default, I believe that they will have a very strong restructuring. I don't think it'll be an unstructured default, meaning that they run out of money. I think they'll get more money on top of the cash they already received. Even though they haven't met the criteria for the austerity that they've done. I believe that it's the end of the line for this program. The eurozone is going to see that the deal with Greece isn't working out, and realize that there's no way they're ever going to get re-payed. The eurozone is going have to right down the debt, let Greece default, then deal with it in an orderly and structured way. The problem with this deal though is that the bondholders of the Greek debt. While that's principally Greek banks, there's also German, French and Belgium Banks.
But what people are asking is how will this affect the United States, a country teetering on recession? While defaulting sucks. I look at it as a positive thing. It shows that the countries ways are unsustainable, and it forces them to change. What we should really be concerned about is the economy, in both the United States and in Europe. Because at the end of the day austerity, which is what these countries are undergoing, is not a beneficial thing over the short to medium term. When you start cutting staff or wages (which is what austerity is) your basically just sucking money out of the economy and so that's going to have a negative impact on it. Greece defaulting shouldn't be frowned upon, shouldn't be looked at in fear by other nations. Nations shouldn't bail each other out, It sets a bad example. Let Greece default, if Greece wants to remain a player in the EU, then they should help themselves, not plead for help from others!
I have recently been hearing about all the Greek debt problems on the news and agree with your idea that it is Greece’s own fault that it has no money and that if it cannot pay off its debts, they should be made to default. The only problem with this is the negative effects that this would have on the global economy. If Greece defaulted on its debt, it would have a horrible impact on Europe and therefore demand for American goods in Europe would fall dramatically hurting our economy as well. The markets would tumble and investors would lose a great deal of money pushing the country into a likely recession. The problem with the global economy now-a-days is that factors controlled by few have a huge impact on many. We have no say in what the Europeans do with their money but it doesn’t matter. Their decisions affect us anyway. So yes, while the free market capitalist in me says let Greece default, I do hesitate knowing the negative effects of what would happen in Greece was to default.
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