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[Varche]

If you look at the history of defaulting then, economies start to recover almost immediately, which you can see in several research papers available on the Internet. If anybody is interested I will post the links.

So, to me the most likely scenario is that once Greece goes belly up (and it will be soon) and leaves the Euro there will probably be two to four weeks of turmoil and then they will start to grow where the banks and the economy is flooded by the Greek Central Bank with New Drachmas. They will reduce their interest charges by defaulting massively on all current debt by 75-100% (This will make the last default a few weeks ago look like a kiddies tea party).

Their central bank will provide liquidity that is currently absent to get their wheels of industry turning again, the currency will devalue against the Euro between 40 and 80%, which will make their exports much more competitive and holidays their cheap again (Tourism is 15% of GDP). Yes, there will be an inflation blip from increased import costs and also due to the central bank liquidity of flooding the country with New Drachmas. This is not dissimilar to when we left the ERM on black wednesday.

The end result will be a growing economy and falling unemployment from months 2 or 3 onwards.

This is when the Trokia start bricking it. As the populations of Portugal, Spain, Italy and Ireland say at the polls or in the streets, we want some of that and the Euro countries start to drop like flies, taking France and Belgium with them. The Euro will then consist of a few minor economies and (Latvia, Estonia etc and Germany, the Netherlands and possible Austra.

If I was a EU / Eurozone politician right now, I would be watching the sales of rope and baling wire very closely and getting very nervous every time I walked past a lamp post. 

the Netherlands will want out too. They aren't a happy bunch either.  The only thing I can't see with your scenario is the banks. They won't be happy at taking massive hits. They aren't casinos you know. Wait a minute they are , as you were.

I would just like to report that my fledgling business is doing great. I am selling mattresses. Had loads of enquiries from Greece, Italy and here at home they are selling like hot cakes. .

[Nickbat]

If you look at the history of defaulting then, economies start to recover almost immediately, which you can see in several research papers available on the Internet. If anybody is interested I will post the links.

So, to me the most likely scenario is that once Greece goes belly up (and it will be soon) and leaves the Euro there will probably be two to four weeks of turmoil and then they will start to grow where the banks and the economy is flooded by the Greek Central Bank with New Drachmas. They will reduce their interest charges by defaulting massively on all current debt by 75-100% (This will make the last default a few weeks ago look like a kiddies tea party).

Their central bank will provide liquidity that is currently absent to get their wheels of industry turning again, the currency will devalue against the Euro between 40 and 80%, which will make their exports much more competitive and holidays their cheap again (Tourism is 15% of GDP). Yes, there will be an inflation blip from increased import costs and also due to the central bank liquidity of flooding the country with New Drachmas. This is not dissimilar to when we left the ERM on black wednesday.

The end result will be a growing economy and falling unemployment from months 2 or 3 onwards.

This is when the Trokia start bricking it. As the populations of Portugal, Spain, Italy and Ireland say at the polls or in the streets, we want some of that and the Euro countries start to drop like flies, taking France and Belgium with them. The Euro will then consist of a few minor economies and (Latvia, Estonia etc and Germany, the Netherlands and possible Austra.

If I was a EU / Eurozone politician right now, I would be watching the sales of rope and baling wire very closely and getting very nervous every time I walked past a lamp post. 

Exactly, Rods. I have read that people are not that keen on booking a holiday to Greece at the moment and have been whingeing about the prices in Greece over the last few years. Tourism is a major earner fro Greece. Those same people have been saying that, if they drop the euro, they'll be out there like a shot - enjoying cheaper holidays. Of course, they will be spending the same amount of money, but will get more for it, and Greece will prosper again...in a short space of time, IMHO. 

[Rods2]

Greek problem is solved!

http://www.telegraph.co.uk/news/matt/?cartoon=9276014&cc=9237222

[Sir Tigger KC]

If you look at the history of defaulting then, economies start to recover almost immediately, which you can see in several research papers available on the Internet. If anybody is interested I will post the links.

So, to me the most likely scenario is that once Greece goes belly up (and it will be soon) and leaves the Euro there will probably be two to four weeks of turmoil and then they will start to grow where the banks and the economy is flooded by the Greek Central Bank with New Drachmas. They will reduce their interest charges by defaulting massively on all current debt by 75-100% (This will make the last default a few weeks ago look like a kiddies tea party).

Their central bank will provide liquidity that is currently absent to get their wheels of industry turning again, the currency will devalue against the Euro between 40 and 80%, which will make their exports much more competitive and holidays their cheap again (Tourism is 15% of GDP). Yes, there will be an inflation blip from increased import costs and also due to the central bank liquidity of flooding the country with New Drachmas. This is not dissimilar to when we left the ERM on black wednesday.

The end result will be a growing economy and falling unemployment from months 2 or 3 onwards.

This is when the Trokia start bricking it. As the populations of Portugal, Spain, Italy and Ireland say at the polls or in the streets, we want some of that and the Euro countries start to drop like flies, taking France and Belgium with them. The Euro will then consist of a few minor economies and (Latvia, Estonia etc and Germany, the Netherlands and possible Austra.

If I was a EU / Eurozone politician right now, I would be watching the sales of rope and baling wire very closely and getting very nervous every time I walked past a lamp post. 

I broadly agree with you Rod, but I think the time frames will be months and years, rather than weeks and months... 

Also we shouldn't underestimate the dangers of inflation or more probably hyper-inflation. The Drachma as soon as it is re-introduced will plummet in value against all the major currencies.  This will be fanatastic for the Greek tourism industry, olive oil, retsina, greek yogurt and feta cheese producers!  I'm not sure what else Greece produces and exports?? 

However, anything imported like consumer goods, vehicles and most importantly fuel will become extremely expensive!!    The main danger is that the international money markets won't deal with the Drachma (Possibly politically motivated!) and so Greece will find it hard to obtain hard currency to buy oil and gas, resulting in fuel shortages and possibly huge social unrest.....  Thus hitting their tourism industry and major hard currency earner! 

I think there is a real danger that Greece could become a European Zimbabwe.  They will suffer the ire of the EU for daring to defy them and it may be that the only country that will accept Drachmas for oil is Iran, which will attract the ire of the US... 

It's all theoretical and abit of a doomsday scenario, but default and the 'Grexit' isn't necessarily the easy option!!    It may yet come to pass that it's their only option.... 

[Grrrrrr]

Could go down the route of a PIIGS Euro and a northern Euro yet! That might save a lot of issues, including skint countries finding the cash to switch their infrastructure back to their old currencies!