The Greeks votedno to the European Union's terms, despite warnings from the EU that rejecting new austerity terms would set their country on a path out of the Eurozone. 62% voted "No" while 38% voted "Yes".
Yeah, the opinion that Greece needs to exit the Euro is because this is seen as a Balance of Payments crisis. Here the resolution would be to devalue the local currency, which would allow prices in the economy to readjust. Income would drop, and the GDP would shrink even on top of the ~20% that has been lost in the last few years, but eventually prices bottom out, Greek goods and services become attractive again and unemployment would start to fall.
Anyway, I agree that this should not be considered the only option, the current account deficit is not the only problem in Greece and even if it were, currency depreciation is not the only way to resolve it. Greece might just be offered a new deal on softer terms.
(Score: 1) by jalopezp on Monday July 06 2015, @04:21PM
Yeah, the opinion that Greece needs to exit the Euro is because this is seen as a Balance of Payments crisis. Here the resolution would be to devalue the local currency, which would allow prices in the economy to readjust. Income would drop, and the GDP would shrink even on top of the ~20% that has been lost in the last few years, but eventually prices bottom out, Greek goods and services become attractive again and unemployment would start to fall.
Anyway, I agree that this should not be considered the only option, the current account deficit is not the only problem in Greece and even if it were, currency depreciation is not the only way to resolve it. Greece might just be offered a new deal on softer terms.