What’s Up With Greece?(Part-3)

“ The situation is quite strangled right now in this beleaguered southern European Country. Mr. Tsipras is meeting Chancellor Angela Merkel of Germany, President Francois Hollande of France, Eu’s President Donald Tusk in the European Summit.

Germany put forward a proposal called as ‘Back Envelope’ which suggested that Greece should leave the Eurozone for five years believing that Greece’s debt could be written off only outside eurozone. There are rumours of Russians wanting to provide aid to Greece. But I wonder if that is true as Russia is already facing a recession.

The summit was cancelled by Athens’ Finance Minister as it was really getting tough to reach at any conclusion. But it has been resumed now.” I said.

“What all problems can ensue Grexit?” she asked.

“Umm.. I have heard people saying that the country will have to sustain heavy damage as it would be cutoff from financial markets. Subsequent to the exit its currency is going to turn weak as it barely exports anything. Such arguments are being made. Also, there is fear that it would lead to capital flight.

But there are supporters to Grexit as well who have their own arguments. For eg Hans-Werner Sinn who is an advisor to the German government's economy ministry said that the access to financial markets is forfeited by insolvencies and not due to any such thing like an exit from eurozone. Also, he believes that the trade deficit will disappear after devaluation so Greece might not even require an access to markets. He added that since the imports shall be expensive the domestic markets especially agricultural product market shall revive.” I explained

“I hope the discussions at the EU come out of the impasse they have hit on. And Thank you so much.” she replied while shaking hands and we left the café, quite eager to know where the turn of events finally lands Greece at.

{Shall be glad to receive comments, if any}