An exit from the euro is Iinefficient, undesirable and not feasible, the Federation of Hellenic Enterprises (SEV) said in a report, adding that this solution was as outrageous as a proposal circulating that someone very rich will repay the Greek debt.
“In both cases, naively some people believe that a third person will pay our debt. There is no one to take over our debt and no one will make it easier for us to live at the expense of others. Our debt must be paid in euros and if not properly repaid, the country risked to be isolated from international community, undermining all its economic and social achievements,” SEV said in its weekly bulletin on the Greek economy.
SEV described the consequences of a Grexit, noting that the country will not be able, largely, to cover its imports of goods and services (53 billion euros), while its production structure will collapse. The country’s dependence from the EU in meat and dairy products reached 100 pct, in cereals 62 pct, in livestock feed 53 pct, while 70 pct of net imports in goods are inflows to the production process, a 25 pct of our imports are re-exported and the vast majority of our trade transactions are made with the EU.
SEV noted that the biggest cost for the country is that Greece will be marginalized and Greeks will become much poorer. We will not only lose the euro currency but will be forced to leave the EU as well. A Grexit and the transformation of Greek banks’ assets and liabilities to a new undervalued currency -since their debt to the European Central Bank will remain in euros- will force banks to record a negative net position, or differently, to bankrupt and be nationalized. All these will happen in an environment of hyper-inflation. In real terms, poverty will reign and misery without any improvement in wages and pensions. SEV warned that deposits in Greek banks will lose a significant part of their value.
“No political force can stand the biggest income redistribution from the poorer to the richer that a currency conversion will bring,” SEV noted.