24 April 2018

If there was a Greek exit there will be massive contagion

13 March 15 | Nouriel Roubini
Nouriel Roubini



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Solum Property Solutions

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IBI Group

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Antulio Richetta

Director IBI Group
Nouriel Roubini, Roubini Global Economics co-founder, in an exclusive interview in Bloomberg today discussed what a Greece exit from the euro would look like.


According to the economics professor such a scenario is highly unlikely to result from the advancing negotiations in Brussels while the risks attributed to it is far from just low.

“If there was a Greek exit, there will be massive contagion.” Roubini said.

If there would be one “Spreads in the periphery would widen rather than narrowing down the way they are right now, because ECB actions are under way.

There would be run in other Eurozone banks and once one country is out, people would ask “Now whose next?”, he explained.

“That’s why I think economically and financially, it doesn’t make sense to have a Greek exit.”

“Even the Germans have realized it and there would also be geopolitical consequences.” Roubini argued.

In addition to those, Russia is roaring abovr the Balkans and the Europe in general, looking to seize an instable environment in either regions or the proper timing to step in.

“The Russians are becoming more aggressive not just in Ukraine but also in the Balkans. From Moldova, to Bulgaria, to Serbia, to Greece that is an Orthodox country.

Greece was to exit Eurozone within May and happened the arms of Russia were there.” Roubini underlined in Bloomberg.

But even these are not the only reasons why Europe needs to avoid a so called “GREXIT”.

“And also you have other geopolitical problems that Europeans have. Terrorist accidents from Paris to Denmark, you have Jihadists who can come back to blow themselves throughout Europe and the Middle East is a mess.” he said.

And he concluded,

“So, if you think about it, even in a German point of view, does not make sense to have an exit of Greece from the Eurozone. A Greece that represents only two percent of the Eurozone GDP and cause economic, financial and political damage to the Eurozone.”

“Therefore when there would be market concerns for Greece I think there will be compromise between the two sides on the deficit, on the debt, on the structural reforms.”

“I do not think that a Greek exit from the Eurozone is likely.”


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