Greece Gets Closer to the Cliff
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The world shifts uneasily in its chair as world leaders prepare for a new round of Greek elections on June 17, which could mean an unprecedented exit of Greece from the euro zone.
No doubt, the Euro debt crisis will remain a tense topic during this week’s G8 meetings at Camp David. When the newly elected Greek Prime Minister was unable to form a coalition government, a temporary government was put in place that, according to the New York Times, is a “mix of veteran diplomats, academics, and economists.” On June 17, Greeks will vote for a new prime minister, and many are calling this more or less a referendum on whether or not to stay in the Euro Zone.
The Economist reports that a growing number of Greeks, 80%, want to stay in the euro zone. However, Greeks have protested the large increase in taxes and modest restrain in spending as conditions of the bailout.
As fears mount of a Greek exit, it becomes increasingly clear that if Greece leaves the Euro to form a new currency, it would be worth much less than the Euro. This fear has led to its citizens withdrawing money rapidly from European banks. On Monday alone over $894 million was withdrawn from Greek banks, a jump from the average of $5.1 billion per month that has flowed from the country since 2009 when the crisis began.
During the G8 summit, leaders will likely discuss the rigidity with which they will hold to the standards required of Greece for a bailout. Even Angela Merkel, who is Chancellor of Germany and been a lead negotiator in the Greek bailout is facing a tough reelection and has recently expressed increased flexibility over another stimulus. Many fear Greece leaving the Euro Zone could radically effect Spain and Italy and harm the European economy even further.