Michael Meacher MP

With the smart money on an early Greek exit, the two main questions to arise are: what will happen to Greece, and what future then for the Eurozone?   Ig Greece leaves, the exchange rate will drop sharply from 340 drachmae to €1 at entry to the euro to perhaps 1,000 drachmae, a loss of value to the national currency of around 75% as happened to Argentina in a similar situation in 2002.   But though in the latter case savings were decimated and import prices trebled, Argentina, released from an untenable dollar-peso parity, recovered strongly.   So probably will Greece, given the introduction of capital controls and administrative controls to ensure vital supplies reach key enterprises.   Removing the pressure of unbearable debt, boosting competitiveness from the intial collapse of the currency, lifting austerity, and paving the way for a much needed industrial restructuring should, after a painful transition, see Greece through.   But what of the other 26? (more…)