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Standard Bank says Greece and Ireland may leave Eurozone

The headline at Bloomberg reads “Ireland, Greece May Leave Euro, Standard Bank Says.”  Before I even started reading this I was sceptical.  The Telegraph’s Ambrose Evans-Pritchard makes calls like this, but his Euro-sceptic views are well-known.

Here’s what the article says:

The absence of a mechanism to permit so-called fiscal transfers within the 16-nation region may undermine the exchange-rate system, said Steve Barrow, head of Group of 10 foreign-exchange strategy at the bank in London. Concern some nations will need to be rescued may drive the premium investors demand to hold 10-year Greek debt instead of benchmark German bunds to 400 basis points next year, from 214 basis points today, he said. The Irish premium may also jump, he said.

“Countries like Ireland and Greece may not be able to grow out of the current crisis,” Barrow said in a telephone interview today. “With interest-rate cuts, exchange-rate depreciation and significant fiscal support all off limits for these countries, bailouts or even pullouts from EMU may happen next year.”

The Irish Finance Ministry called the suggestion it might leave the euro area “uninformed comment,” and Greece said there was no chance it would leave.

I have to agree with the Irish here – this is pure speculation of what may or may not happen months from now. I am fairly eurospectipal. But I tend to doubt stories like these because they are usually from an interested party talking his own book.  The situations in Greece and Ireland are dire.  But, c’mon. There are a lot of policy remedies that can take place before it reaches this point. And no one in government is talking about anything remotely as draconian as leaving the Euro.  Moreover, going it alone is not without risks.  Just ask Iceland.

About 

Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty years of business experience. He is also a regular economic and financial commentator on BBC World News, CNBC Television, Business News Network, CBC, Fox Television and RT Television. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College. Edward also writes a premium financial newsletter. Sign up here for a free trial.

9 Comments

  1. Matt Stiles says:

    Saying it will happen, and saying it will happen next year are two different matters entirely. I’d feel comfortable saying that within 10 years some members will begin withdrawing from the EMU. And within 20, the EU will cease to exist. But trying to put such precise timeframes on enormous geopolitical events is unwise. These things rarely happen as quickly as anticipated.