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FT: Grexit or Bankruptcy for Greece Within the Next 4 Years

grexit-drachmasThe Financial Times made a shocking prediction concerning Greece. While analyzing the sustainability plan of the German government that derived from the coalition between Angela Merkel with the Social Democrats. The newspaper wrote that within the next four years, Greece will either return to the drachma or declare bankruptcy, or maybe both scenarios will take place.
The Financial Times article was entitled “Germany’s coalition will have to break promises.” It characteristically mentions that the leaders of the ruling coalition would not follow through with their promises to the German voters because there is “a lack of preparation by the political class for what will hit it in the next four years. The big threat to Germany over the next four years is not demography but the unfolding eurozone debt crisis. No matter which crisis resolution scenario prevails, some promises made to the electorate are going to be broken.”
The FT article gave a prime example of what is to follow in the next four years of the Greek debt crisis and pointed out that: The Organisation for Economic Co-operation and Development is forecasting that the Greek sovereign debt ratio will stabilize at 160 per cent of gross domestic product in 2020. The EU and the International Monetary Fund have been basing their entire bailout arithmetic on a target of 124 per cent. In the next four years, Greece will either default or exit the euro – or both. The EU’s “pretend-and-extend” strategy of revolving loans at longer maturities and lower interest rates is approaching a natural limit.”

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