Greece : What's next ?
The Greek debt problem is temporarily solved and we are to applaud prevailing
political ambition.
I write « temporarily » for Greek austerity ought not to
entail a recessional spiral and a revival of social appeasement.
Actually, there are no certainties in this domain, for nobody can make
the postulate of Greece’s docile submission to a rigorous budgetary impoverishment.
If this plan succeeds, two effects are predictable : German
interest rates are likely to increase, for German obligations served as a
protection against the bursting of the Euro zone, which seems to have been
avoided. The Euro is likely to get stronger,
if only when compared to the dollar.
But, identically, if the Greek plan turns out to be a failure and leads,
in unimaginable, deplorable and dramatic circumstances, to an exit of the euro
zone, this could result in raising German interest rates and a reinforcement of
the « residual » Euro.
To conclude, very briefly, the risk as of now could be to have a
currency that is too strong.
In economics, nothing is simple…
