G-8: Greece Should Stay

by Kyle Colona on May 22, 2012

Greek Euro Exit Possibility Moves to Center of Debt Crisis Leaders from the Group of Eight nations intend for Greece to stay put in the euro zone, even if bond holders may be pulling the purse strings.

Of course, the austerity measures needed to fulfill EU mandated cost-cutting commitments have revealed the “broad differences” on how to keep Greece in the zone, according to Bloomberg News.

But a joint statement by the G-8 crew said in part that “we agree on the importance of a strong and cohesive euro zone for global stability and recovery, and we affirm our interest in Greece remaining in the euro zone while respecting its commitments.”

However, Angela Merkel continues to play a heavy hand even though she no longer has Nicolas Sarkozy as a wingman. The German Chancellor continues to argue that curbing public deficits and boosting growth go hand in hand.

With a new leader at the helm in France, the country is now tilting to the left, and it intends to put growth front and center by calling on the ECB to pump euros into the Grecian money pit in the form of newly issued Euro Bonds. This play had previously been off the table before the recent elections in France that swept Mr. Hollande to victory.

Meanwhile, EU policy makers are slated to meet “informally” tomorrow leading into a June summit where all these issues will be hashed over once again. And Italian Prime Minister Mario Monti also reportedly said he will meet next month with his German and French counterparts in Rome over a plate of pasta and marinara sauce ahead of the EU summit.

But the question remains whether they’ll choose a vino Chianti or a more complex Valpolicella.

In the final analysis, a Greek pull out from the euro zone still looms as the lingering euro debt crisis continues to hamper economic growth not only in Europe but also in the broader global economy. And the long term effect on the US economy is also unclear, and it is highly likely that these questions will remain unresolved until after the November presidential elections.

However, there is a growing dialogue that the EU is merely kicking the can down the road and a departure by Greece is inevitable. Such an event could also lead to Portugal, Ireland and Spain following. Some analysts are already factoring this possibility into their longer view of the markets in the US and across the global capital markets.

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Kyle Colona is a New York-based freelance writer and a Feature Writer for CompliancEX> and the Wall Street Job Report. He has an extensive background in legal and regulatory affairs in the financial services sector and his work has appeared in a variety of print and on-line publications. You can find him on linkedin.

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