The choice can be attractive for nations in financial peril: Stop paying debts, fire up the printing presses and flood the zone with cash. But the euro, for Greece, foreclosed the option. Now, longtime advocates of an exit from the shared currency may soon prevail.
If Greeks vote this Sunday against the harsh austerity that Europe has demanded in exchange for a financial lifeline, European Union leaders have said that Greece will eject itself from the euro zone. The transition would be a financial experiment run on the fly — and even some who have long championed Greece's old currency say they are worried about the chaos that could ensue.
Greece's leaders have vowed to their citizens that they can reject austerity without rejecting the euro, but European leaders have said they will not blink. That has Greeks like Michael Karalis wincing as they stare at their life savings locked away inside banks, fearing that their euros could soon be converted into a less-valuable replacement.
"I know that I will lose my savings from a hardworking life," said Karalis, 71, a retired engineer, as he waited to pull money from an ATM on Thursday. Long lines for cash have become ubiquitous in Greece after strict limits were imposed over the weekend on how much citizens could withdraw from their accounts. Now people are limited to 60 euros, or about $67, per day.
"I'm fine. But the savings was for my children and grandchildren," Karalis said.
A large majority of Greeks want to remain in the euro zone, and many do not see a "no" vote in the referendum as a rejection of the currency. But without serious talks toward a new bailout plan, the European Central Bank may feel that its rules oblige it to pull the plug on emergency assistance for Greek banks.
If that were to happen, then the only way for Greece to maintain a functioning financial system would be a quick government decision to print an alternative currency.
The mechanics of a currency switch would be chaotic, if technically simple, with a return to the drachma or a new national coin of any other name potentially taking the early shape of government- or bank-issued IOUs. Greece, which now prints euros, as do the other nations that share the common currency, could within weeks alter its presses to churn out national bills — or outsource the task to specialized companies abroad.
Some economists have argued for years that Greece should leave the euro. There would be short-term pain, they argue, as Greeks adjust to the switch back to a local currency that would probably be worth far less than the euro. But in the long term, advocates say, Greece would regain control of its monetary policy, finding itself once again able to boost stimulus spending even as a weaker currency makes its exports far more attractive on world markets. And more expensive imports would give an edge to domestic industries in the local market.
"Greece belongs to a deeply diseased monetary union," said Kostas Lapavitsis, an economist and member of Parliament from Greece's ruling Syriza party who has long called for a return to the old currency, the drachma.
"If Greece went back to a national currency, it wouldn't be returning to some kind of paradise," Lapavitsis said. "What we need is an economy that can deal with these extraordinary pressures and difficulties in an organized manner."
He said he feared that if Europe pushed Greece off the euro by force, the results could be far more painful than if there was an organized, negotiated exit of the type he has long advocated.
But critics argue that those who see a long-term benefit from a euro exit in Greece are fantasists who pay little attention to the nation's recent history. A successful transition would require a government with a deft financial touch and a will to control spending. Otherwise, Greece could find itself again trapped in the cycle of high inflation it lived in before it adopted the euro. Runaway inflation could erode the value of salaries and nest eggs.
"If you have a smart and tough government, you could try to use a euro exit to get the country back on track," said Peter Bofinger, an economic adviser to German Chancellor Angela Merkel. But if a government started increasing pensions and hiring more public-sector workers — a temptation in a nation where unemployment has skyrocketed and poverty is spreading — "the risk is a spending spree that would lead to hyperinflation," he said.
Some analysts have pointed to Argentina's devastating debt default and devaluation in 2001, and its subsequent recovery, as evidence that even a less-than-reform-minded government can leverage its monetary policy to return to growth.
But Argentina differs from Greece in deep ways. Argentina is one of the world's top 25 economies, a commodity-rich nation that exported its way to growth with soybeans, corn, and heavy industries such as steel and cars. Greece, with an economy the size of Connecticut's, lacks many of those advantages.
Instead, Greece risks replicating post-2001 Argentina's downsides with none of the upsides. Today, despite Argentina's growth, its government is still known for fudging its economic data. Nearly 15 years later, it is locked in complex legal battles tied to its defaulted debt.
Winemaker Stellios Boutaris should be perfectly positioned to benefit from a Greek exit from the euro, by the lights of international economists, since exports are the great hope for Greece's future financial success. His high-end wines, gathered from vineyards that stretch across his country's verdant hills, would be more competitive abroad if his costs at home were in weak drachmas.
But instead of relishing an exit from the euro zone, Boutaris is worrying about his bottom line. Like many Greek exporters, he relies heavily on a supply chain of imported goods. Those costs could skyrocket even while credit dries up.
Advocates of going off the euro who say exporters like him would fare better on the drachma "don't understand that we have to import bottles," Boutaris said Thursday at an Athens wine bar, where the euro was the beginning, middle and end of all conversations. "We have to import corks. We have to import barrels." Only the grapes themselves — and the workers — are local, since Greece doesn't produce any of the other supplies.
All of those imports would become steeply more expensive if Greece left the euro and began printing its own money.
With the days counting down to Sunday's referendum, opinion polls show the vote too close to call. But amid fears about what will happen Sunday, many Greeks are trying to take euros from their accounts while it's still possible.
"I don't know what will happen, so I am trying to get as much cash as I can," said Karalis, the retired engineer, as his turn finally came to use the ATM. "At the age I am, it's very depressing to have to wait here in this line."
The Washington Post
Fri Jul 03 2015
![If Greece is ejected from the euro zone, what then? If Greece is ejected from the euro zone, what then?](https://resizer-awani.eco.astro.com.my/tr:w-177,h-100,q-100,f-auto/http://img.astroawani.com/2015-07/81435893190_GREECE.jpg)
A large majority of Greeks want to remain in the euro zone, and many do not see a "no" vote in the referendum as a rejection of the currency.
![Kes bunuh Nur Farah Kartini: Suspek berkhidmat 5 tahun dalam PDRM Kes bunuh Nur Farah Kartini: Suspek berkhidmat 5 tahun dalam PDRM](https://resizer-awani.eco.astro.com.my/tr:w-177,h-100,q-100,f-auto/https://img.astroawani.com/2024-07/81721102947_suspekbunuhNurFar.jpg)
Kes bunuh Nur Farah Kartini: Suspek berkhidmat 5 tahun dalam PDRM
Anggota berusia 26 tahun terbabit bertugas di Balai Polis Slim River di bawah Ibu Pejabat Polis Daerah (IPD) Muallim dengan pangkat lans koperal.
![Perunding pelaburan didakwa terlibat pengubahan wang haram hampir RM1 juta Perunding pelaburan didakwa terlibat pengubahan wang haram hampir RM1 juta](https://resizer-awani.eco.astro.com.my/tr:w-177,h-100,q-100,f-auto/https://img.astroawani.com/2024-07/51721117052_SaifulNizamSaharud.jpg)
Perunding pelaburan didakwa terlibat pengubahan wang haram hampir RM1 juta
Seorang perunding pelaburan mengaku tidak bersalah atas empat pertuduhan pengubahan wang haram berjumlah hampir RM1 juta.
Purata suhu meningkat 0.24 darjah celcius per dekad
Berdasarkan rekod dari tahun 1969 hingga 2019, purata suhu bulanan di Semenanjung Malaysia pada bulan Mei 2024 adalah 28.8 darjah celcius manakala purata suhu bulanan pada bulan Mei 1974 iaitu 50 tahun yang lalu adalah 26.6 darjah celcius.
ADUN dari kerajaan perpaduan sertai Pas
Menurut Takiyuddin, keahlian Muhamad Jailani yang juga wakil rakyat UMNO diterima pada 10 Jun tahun lalu, namun diumumkan secara rasmi hari ini.
![Kerajaan lihat semula perjanjian penjualan air kepada Singapura - Fadillah Kerajaan lihat semula perjanjian penjualan air kepada Singapura - Fadillah](https://resizer-awani.eco.astro.com.my/tr:w-177,h-100,q-100,f-auto/https://img.astroawani.com/2024-07/81720085306_FadillahYusof.jpg)
Kerajaan lihat semula perjanjian penjualan air kepada Singapura - Fadillah
Fadillah berkata perkara itu sudah berlaku ketika zaman pentadbiran bekas Perdana Menteri Tun Dr Mahathir Mohamad lagi.
![Pelancong asing ditahan disyaki cabul pekerja spa di Pulau Perhentian Pelancong asing ditahan disyaki cabul pekerja spa di Pulau Perhentian](https://resizer-awani.eco.astro.com.my/tr:w-177,h-100,q-100,f-auto/https://img.astroawani.com/2022-07/51658407048_Cabul.jpg)
Pelancong asing ditahan disyaki cabul pekerja spa di Pulau Perhentian
Polis menahan seorang pelancong lelaki warga Maghribi kerana disyaki mencabul seorang juruterapi wanita rakyat tempatan di Pulau Perhentian.
Warga Thailand seludup diesel dihadapkan mahkamah
Seorang pemandu lori warga Thailand dihadapkan ke mahkamah atas menyeleweng 322 liter minyak diesel minggu lalu.
ADUN Rembia sertai Pas: YB Kampar minta buka riben putih
Susulan pengumuman ADUN Rembia sertai Pas dalam sidang media, YB Kampar, Chong Zhemin kemuka Peraturan Mesyuarat dan menyifatkan satu penghinaan besar buat Parlimen.
#SisiTVParlimen
#AWANInews
#SisiTVParlimen
#AWANInews
![Malaysia, Brunei dalam proses rundingan muktamad sempadan darat negara - Mohamad Malaysia, Brunei dalam proses rundingan muktamad sempadan darat negara - Mohamad](https://resizer-awani.eco.astro.com.my/tr:w-177,h-100,q-100,f-auto/https://img.astroawani.com/2024-07/41720590984_DatukSeriMohamadH.jpg)
Malaysia, Brunei dalam proses rundingan muktamad sempadan darat negara - Mohamad
Mohamad Hasan berkata buat masa ini, kerja-kerja penandaan dan pengukuran di lapangan telah meliputi 175.96 km atau 33.3 peratus daripada keseluruhan jarak sempadan.
Kim Pan Gon undur diri kesan kepada Harimau Malaya
Apa reaksi peminat Harimau Malaya dan penganalisis sukan mengenai peletakan jawatan Kim Pan-Gon?