Monday, July 13, 2015
Europe Opts For Can-Kicking Option
Since the Greek economy is being crippled by the "reforms" being forced upon it, the government will be unable to service its debt. At some point, the negotiations will have to be re-opened again, and the process would likely repeat. Furthermore, a global downturn would likely re-open the question of the status of the entire euro periphery.
But until then, the rest of the world can return to things like obsessing over the U.S. labour force participation rate, and leverage in the Chinese stock markets. If global demand somehow increases, the eurozone will benefit from the weaker euro, and there may be less pressure on their economies.
It is a testament to the power of groupthink that the Greek government chose austerity measures (that were obviously designed to be unacceptable) instead of the option of a "temporary" exit.