A Crack in the Foundation
The Economy. The subject of textbooks, global summits, and endless conversations among…. Everybody. For the people of Greece, the trouble in the economy is more than a subject for discussion, but an issue of dire urgency. In a vote last week, not a single party was able to gather enough votes in order to gain control of Parliament and begin the country's movement toward a definitive action. However, the vast majority of votes were cast for parties representing anti-austerity measures.
While there are a variety of possibilities on the table, the most serious is Greece’s recession from the European Union, and thereby their recession from the use of the Euro. The implications to recession are many, but there are a few that stand out.
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| Greek protest of Austerity measures |
The first is the drop in the value of the Euro. If Greece recedes, they will almost certainly refuse or default on their massive debts, immediately dropping the Euro’s value and seriously damaging the European banking system. While this would not be a fatal blow to the Euro, this would be a serious setback to the recovery plan of the entire Eurozone, as the value of exports dropped and the cost of exports rose.
The second impact is the shift in European politics. No country has receded form the union before, and the mindset of the recession may have enormous implications for the future of other countries with serious debt problems. If this is seen as a viable option, then other countries may follow in their footsteps. This impact has far greater long term possibilities then even a sudden drop in the European banking system.
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