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More reasons of why Germany and France insists keeping Greece alive;
Here's Who Gets Slammed If Greece Restructures: http://www.businessinsider.com/greek...bt-2011-5?op=1
Bulgaria and Romania rely on Greek banks for a large amount of lending, much of which will be cut back in a Greek collapse due to a reliance on government loans. Reliance will shift towards local deposits as a source of lending, but these economies are struggling somewhat themselves.
When the Greek economy slides, foreign workers from Albania and Bulgaria may lose jobs and stop sending home remittances. Also, FDI to Macedonia (7% of its GDP) and Bulgaria (8% of GDP) will decrease.
It looks like Macedonia urgently needs new trading partner(s) since most likely Greece wont be able to buy or sell anything with Macedonia in near future. But it looks like when Greece will go bankrupt, Bulgaria will get the most of the aftereffect damage cuz according to the table above, Bulgaria gets most of it`s loan money from Greek banks, equals to ~30% of it`s total GDP!!! If we take account that Greek state owes huge debts to it`s own banks and that means when Greece goes bankrupt, most(if not all) of these banks will go bankrupt too.
The Complete Guide To The Oncoming Spanish Debt Crisis That Everyone Is Terrified Of: http://www.businessinsider.com/spain...s-2010-11?op=1
EU central Bank Member: Greek Restructuring Would Lead To A "True Economic Meltdown"
A Greek debt restructuring would have a destructive impact, not just in that country, but across the eurozone and in Germany in particular, according to Italian ECB member Lorenzo Bini Smaghi.
The result of a Greek debt restructuring would be the collapse of Greece's banking system, according to Smaghi, speaking to Italian paper La Stampa. That's because many of the bank's high quality securities would no longer be able to act as collateral when dealing with the ECB. Further, Smaghi says because Greece doesn't control its own central bank, it will have no access to the funds necessary to pay for its spending, including government salaries and pensions. Smaghi describes this event as, "a true economic meltdown."
Smaghi blames Greece's consideration of a debt restructuring on "investment banks and law firms in search of comissions," who have ignored the bad things that would happen as a result.
Smaghi also warns of the impact of a restructuring on German banks which remain exposed to Greek debt.
His comments fall in line with the ECB position, which is strongly against a restructuring. Some sort of soft restructuring, coupled with another bailout, seems the more likely solution, even if domestic German opinion is opposed to any more spending.
May 10, 2011
http://www.businessinsider.com/smagh...cturing-2011-5
A Greek debt restructuring would have a destructive impact, not just in that country, but across the eurozone and in Germany in particular, according to Italian ECB member Lorenzo Bini Smaghi.
The result of a Greek debt restructuring would be the collapse of Greece's banking system, according to Smaghi, speaking to Italian paper La Stampa. That's because many of the bank's high quality securities would no longer be able to act as collateral when dealing with the ECB. Further, Smaghi says because Greece doesn't control its own central bank, it will have no access to the funds necessary to pay for its spending, including government salaries and pensions. Smaghi describes this event as, "a true economic meltdown."
Smaghi blames Greece's consideration of a debt restructuring on "investment banks and law firms in search of comissions," who have ignored the bad things that would happen as a result.
Smaghi also warns of the impact of a restructuring on German banks which remain exposed to Greek debt.
His comments fall in line with the ECB position, which is strongly against a restructuring. Some sort of soft restructuring, coupled with another bailout, seems the more likely solution, even if domestic German opinion is opposed to any more spending.
May 10, 2011
http://www.businessinsider.com/smagh...cturing-2011-5
Here's Who Gets Slammed If Greece Restructures: http://www.businessinsider.com/greek...bt-2011-5?op=1
Bulgaria and Romania rely on Greek banks for a large amount of lending, much of which will be cut back in a Greek collapse due to a reliance on government loans. Reliance will shift towards local deposits as a source of lending, but these economies are struggling somewhat themselves.
When the Greek economy slides, foreign workers from Albania and Bulgaria may lose jobs and stop sending home remittances. Also, FDI to Macedonia (7% of its GDP) and Bulgaria (8% of GDP) will decrease.
It looks like Macedonia urgently needs new trading partner(s) since most likely Greece wont be able to buy or sell anything with Macedonia in near future. But it looks like when Greece will go bankrupt, Bulgaria will get the most of the aftereffect damage cuz according to the table above, Bulgaria gets most of it`s loan money from Greek banks, equals to ~30% of it`s total GDP!!! If we take account that Greek state owes huge debts to it`s own banks and that means when Greece goes bankrupt, most(if not all) of these banks will go bankrupt too.
The Complete Guide To The Oncoming Spanish Debt Crisis That Everyone Is Terrified Of: http://www.businessinsider.com/spain...s-2010-11?op=1
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