Greece and the € / $ rate .

If a default is not allowed to Greece’s solution and the E.U. is to provide the necessary rescue fund to keep Greece out of bankruptcy for as long as necessary till the country grows and create enough reach to pay debts and eliminate deficits ( no less than 35 years needed ) , the € will fall to 1 € = 1.15 $ and the USA will suffer more than anybody can imagine to recover from its own debt and deficit drama , considering the very low competitiveness of american production .

Not to mention the drastic effect that such a weakening of the euro would have in the japanese exports .

So if the non default option is decided , the financing of Greece situation needs to be confronted mainly by the IMF financing with a substantial participation of emerging economies whether we like it or not .

To us the best solution is therefore a controlled default of Greece , with a financing program by the IMF to help Greece ‘s recovery , while banks liquidity measures are implemented by the E.U.

That will not be more unfair than any other alternative .


Published in: on septiembre 26, 2011 at 12:32 pm  Comments (2)