A Possible “Grexit”? Could this be the Beginning of the End for the Eurozone?

10 February, 2015

Nearly two years ago, I wrote an article for this website, entitled, “The Problem with the Euro – it’s a Cultural Thing,” In the article I discussed the cultural differences of the makeup of the eurozone and why I thought that this factor was a key player in the financial crisis gripping the eurozone project and concept.

I also argued the fact that in the headlong rush for economic harmony. I.e. that of a single currency – the euro and in which the very diverse, cultural differences, between its member states had been vastly underestimated, if not...overlooked entirely. It would now seem that what I had to say all those many months ago could be, at least, bear some merit.

Alan Greenspan, the Fed’s maestro for over twenty years, said this last weekend has now gone on record as saying, on the BBC’s radio broadcast, “The World This Weekend,” that, Greece will leave the Eurozone. I don't see that it helps Greece to be in the Euro, and I certainly don't see that it helps the rest of the Eurozone. It's just a matter of time before everyone recognizes that parting is the best strategy. The problem is that there is no way that I can conceive of the euro of continuing, unless and until all of the members of eurozone become politically integrated - actually even just fiscally integrated won't do it.

And, here is the key phrase he used, “Politically integrated,” which gets my attention – Greenspan cannot conceive the euro working in its current formant unless there in political integration, with the eurozone members. However, for that to happen, then there also needs to be cultural integration – I argue that the two go cap in hand. I.e. The cultural mentalities of the different countries involved, because just being “Fiscally integrated” Greenspan has said, “Won’t do it.”

The cultural divides between the northern and southern countries of Europe are especially acute.

Greenspan went on to say this in conclusion, “short of a political Union, I find it very difficult to foresee the Euro holding together in its current form. It probably could get a union of Germany, Austria, Luxembourg, the Netherlands, Finland for example. But not south Europe.”

With the anti-euro, as a result of the austerity measures being foisted on them + the anti-Merkel political parties now rising to the fore in peripheral European countries, Greenspan seems to have hit the nail right on the head.  

The fact of the matter is this...Mario Draghi, head of the ECB has said, “That if the Euro breaks down and if a country leaves the Euro, it’s not like a sliding door. It’s a very important thing. It’s a project within the European Union. That’s why you have a very hard time asking people like me, what would happen, if?” There is no plan B.” 

Today the threat of a Grexit, now seems so real the UK’s Prime Minister, David Cameron has discussed plans for a Greek exit, from the eurozone with the senior treasury and the Bank of England officials – discussing the financial risks to British businesses and interests; should the euro capsize.

The meeting came as leading figures have warned of heightened Grexit risks, including Alan Greenspan, the former chairman of the US Federal Reserve. It is “just a matter of time” before Greece drops out of the currency bloc, Mr. Greenspan said on Sunday. This could trigger a series of events that could bring about the eventual collapse of the single currency, he warned.

by Victor Romain

Mixed US corporate earnings reaction

Asian equities fluctuated mostly into the red on Friday, following the trend seen in their US counterparts on Thursday. As the latest US corporate earnings...

BoC Holds Rates Steady

The Bank of Canada's monetary policy meeting yesterday saw the interest rates unchanged at 1.75%. However, the central bank cut the GDP forecasts...

Markets Open To A Quiet Trading Day

Economic data is sparse with only the release of the US new home sales report later in the day. The quiet start to the week comes ahead of some key...


Gold need to hold this level

The gold price is now trading at its lowest level since the start of the year and is now consolidating around the $1275 mark and according to one...

Dollar Muted As Equities Rally Ease Off

The US dollar closed Monday's session unchanged as earnings reports from Goldman Sachs and Citi Group missed expectations, blaming the US economy....

Gold faces key moment

The gold price has remained above the $1300 mark in today's trading session after breaking this important level yesterday and today's outcome...


Markets in Details: 11 April 2019

U.S. equities closed neutral to slightly positive on Wednesday after central banks showed support to their economies by keeping both...

Market Risk Appetite Wanes

The International Monetary Fund (IMF) cut its global growth outlook once again. For the year 2019, growth is forecast to rise by 3.3% compared...

USD retreats as factory orders weaken

The monthly factory orders report showed a 0.5% decline on the month matching estimates. The declines in February marks a fourth consecutive...


In the past 24 hours Bitcoin has lost -5.23% and reached $5217.35823647. Open your trading account with the best cryptocurrency brokers on special terms today.

In the past 7 days the EUR/USD pair has lost -0.4259% and is now at $1.1296. Start trading and making money on Forex today.

In the past 7 days Ethereum has lost -10.89% and is now at $154.127638964. Have the most popular cryptocurrencies compared online 24/7.


Top Brokers offering Daily Forex Market Reviews


Forex Currencies Forecasts


Top 10 Forex Brokers 2019

# Broker Review
1easyMarketseasyMarkets93%
2FXTMFXTM90%
3HYCMHYCM89%
4FxProFxPro87%
5FIBO GroupFIBO Group85%
6OctaFXOctaFX83%
7HotForexHotForex82%
8FXCMFXCM79%
9AlpariAlpari78%
10XMXM73%
  


Share: