WHY NOT LET GREECE DEFAULT?

WHY NOT LET GREECE DEFAULT?

 

A client recently asked me why Europe just doesn’t let Greece default and leave the EU. The answer is that Greece owes Europe a lot of money. If they can negotiate a settlement creditors might get something. If they default, they get nothing.

Greece owes $352.7 Billion to European banks. That is 175% of Greece’s GDP. By comparison, the US owes $13.8 Trillion to creditors, 47% of whom are foreign. This represents 74% of US GDP.

Seldom mentioned is the role large US banks played in advising Greece on their borrowing spree. Needless to say, they were paid well for their advice and are not returning the fees now that their advice has backfired.

 

 

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