The Greek Tragedy!

SS Kumar By SS Kumar, 30th Jun 2015 | Follow this author | RSS Feed | Short URL http://nut.bz/3nknnkyi/
Posted in Wikinut>Writing>Columns & Opinions

Greece has defaulted in their interest payment to their lenders and a referendum on July 5th would decide on Greece's continuation in the EU. Either way, the European currency and the Union is bound to get affected, as there are more such nations with weak economies within the EU. The author assesses its impact on India.

The storm in the horizon!

The mould is cast. The impacts of financial constraint in various hues are visible around many countries. Just the other day, the French cab drivers paralyzed Paris in their opposition to app-based cab services, Uber. The Greek parliament has voted to go ahead with the referendum on 5th July, on accepting the stiff terms of rolling back subsidies and reducing spending, the terms set by their lenders. The interest servicing of Euro 1.7 Bn. default, would shake Euro and the European Union with more nations precariously balanced on weak economies, like Portugal, Spain and Italy, besides a few other recently added East European countries facing the fire.

Whichever way the Greeks would vote, it certainly is going to be bad days for Alexis Tsipras, the Greek PM, who won the elections on the plank of retaining subsidies and pensions.

The Indian Rupee is already weak against the dollar, and the rollercoaster movement against the Euro has affected Indian exports dearly. The nation has been saved this year by lower crude import bill and highest ever remittance by overseas Indians.

Any adversity to the Euro or the European Union could see a steep fall in the value of Indian currency, pushing up our import bills and external borrowings. The private sector of India, which have substantial borrowings from abroad, and for which no collective data are available, could be one of the worst sufferers.

The Greek default could snowball into a greater depression, far greater than Lehman Bros. bankruptcy. If our economic pundits are claiming that we are well insulated against such upheavals, they will have to eat their words soon!


Tags

Economic And Social Issues, Economic Crisis, Economics, Economy, Finance, Greece, Greek

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author avatar SS Kumar
lawyer, poet, writer and photographer

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Comments

author avatar Sivaramakrishnan A
30th Jun 2015 (#)

A Greek default can play out like a Greek Tragedy and, hopefully, will not be the tip of the iceberg of wider disaster.

Hopefully, the fallout can be contained. Thanks Kumar for the highlight - siva

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author avatar Retired
30th Jun 2015 (#)

The Greeks want their pensions and subsidies but don't want to work. That's what socialism does to a culture and a nation. It is ruinous.

Oh well. The Greeks were once prosperous and enlightened, but they peaked early.

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author avatar SS Kumar
30th Jun 2015 (#)

Thanks Sivpa. We shudder at the thought of another Lehman!
Regards .

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author avatar SS Kumar
30th Jun 2015 (#)

LeRain, it is not Greece alone. In many nations the story is the same. World is becoming a subsidy mart! Regards

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author avatar GV Rama Rao
30th Jun 2015 (#)

Now you're crystal gazing.No two economists agree. Although I'm not an economist, I think the Indian economy is strong enough to withstand these minor shocks.

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author avatar SS Kumar
1st Jul 2015 (#)

Dear Rama Rao, analysing the fall out is a human nature. Had the world trade and economy not so intertwined, as is today, it could have been a minor shock. We need to remember 1991, when we had to pledge 67 tons of gold to buy foreign currency to fund imports.While Greece has merely 2% of the EU's GDP, it is the cascading effect that would follow which is scary, with a few other important EU nations on the brink as well. Regards

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author avatar GV Rama Rao
1st Jul 2015 (#)

OK, kindly note despite the crisis in Greece, the Sensex climbed up 240 points today.

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author avatar SS Kumar
1st Jul 2015 (#)

Mr. GV Rama Rao The Greek PM has again opened the possibilities of a rapprochement yesterday night. It was not a surprise for the stock exchange to receive the news with relief.

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