Douglas J. Elliot, Fortune, April 22, 2015


reece is running out of cash and it promised its fellow Eurozone countries that it would have an agreement with creditors on a list of actions for securing more bailout funding by the end of April. However, it seems that these actions likely will not be agreed upon by this deadline. Having said that, Greece’s economy may worsen, which could force the country to drop the Euro even though Greece and the rest of the Eurozone are trying to steer away from that. The outcome would likely revive the depression that Greece was recovering from. This would not only be damaging to Europe but it would also affect the United States. The assumed decrease in American exports to Europe along with the rising U.S. dollar eventually would bring about less profits and more unemployment in the U.S. Nevertheless, a deal does seem possible, but would likely require that the interest rates that Greece pays on its debt to other European countries to be slashed to almost zero and payments to be extended another decade or two.

The main obstacle to coming to an agreement is the new Syriza Party government, which is radically leftist and distrustful of capitalism. Thus, Syriza sees many of the actions needed to come to an agreement as rather right-wing. Meanwhile, Germany believes that giving into what it sees as unreasonable demands of a new radical left government would cause a domino effect throughout Europe in which similar governments would rise. If there is no agreement, Greece and the rest of Europe will be facing harmful economic repercussions.

Get in deeper:

Debate: Related Articles
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The chairman of the White House council of economic advisers has warned that the world economy would be badly hit if Greece were to crash out of the single currency.Larry Elliot and Helena Smith, The Guardian, April 21, 2015
Martin Wolf, The Financial Times, April 21, 2015
Ian Wishart, Bloomberg Business, April 21, 2015
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