Former U.S. Federal Reserve Chairman Alan Greenspan Says ‘Greece Will Have To Quit Eurozone; New Left-Wing Gov”t Will Default On Its Debts’
Former U.S. Federal Reserve Chairman Alan Greenspan, in an interview with Britain’s BBC News, yesterday (February 8, 2015) said that “Greece will be forced to leave the Eurozone; and, that he could not see anyone to offer loans to the country. Athens has until the end of this month to secure around 5B Euros of financing, to keep the economy going. Failure to do so, will cause the country to default on its debts; and, pull out of the single currency,” Mr. Greenspan said.
“But, the country’s far-left Syriza Party has vowed to ditch austerity, setting the nation on a collision course with the rest of the single-currency bloc,” writes Peter Campbell, City correspondent for London’s, TheDailyMailOnline. He adds that “new Greek Prime Minister Alexis Tsipras, has pledged to write off some of the country’s debts; and, renegotiate the terms of its 185B Euro bailout package — a deal Germany has said is already too generous.” Mr. Greenspan told The BBC: “Greece’s position, if they don’t get additional loans, they will default and leave the Euro. I don’t see anyone willing to put in their funds…having already been disappointed so often.” He added, “all the cards are being held by members of the Eurozone.”
Mr. Campbell notes that Mr. Greenspan’s “dire assessment comes as British Conservative Party leader George Osborne warned that “Greece leaving the Euro would cause ‘real ructions’ in the U.K. economy. Chancellor Osborne added: “The stand-off between Greece and the Eurozone, is increasing the risk every day — to the British economy. Greece has worked hard to stay in the Eurozone; and quite frankly, a Greek exit from the Eurozone — in my view…would have serious [negative] consequences.”
TheDailyMailOnline notes that “there is an EU Summit later this week; and, on Wednesday of next week the European Central Bank will vote on whether to extend loans to Greece.” Germany’s Finance Minister, Wolfgang Schaeble last week said “the package that was already agreed, was ‘generous beyond all measure,’ in a sign that Europe’s richest nation would be unwilling to give ground to Greece.”
“But,” Mr. Greenspan added that a Greek exit from the Eurozone would be miniscule — compared to the Eurozone breaking apart, — something he considers inevitable.” Mr. Greenspan believes Greece will be forced out of the Eurozone; which would lead to others following; and, we could eventually see the Eurozone split into two separate entities, with the richer northern nations, divided from their [poorer] southern countries.” Mr. Greenspan added: “I believe [Greece] will eventually leave. I don’t think it helps them, or the rest of the Eurozone, it is just a matter of time before everyone recognizes that a parting is the best strategy The problem is, there is no way I can conceive of the Euro continuing; unless and until all the members of the Eurozone become politically integrated — actually being just fiscally integrated won’t do it.”
Mr. Greenspan’s views are widely shared and increasingly becoming a consensus view. European banks are in a much healthier position now than they were in 2008; and a Greek exit would not — in an of itself, trigger a fiscal calamity as it might have five years ago. But, once one country leaves, the mold has been broken so to speak, and contagion and discord increase the likelihood that a breakup of the single currency is only a matter of time. V/R, RCP