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Friday, May 27, 2011

The Greek Tragedy - The Return of The Drachma?

Jean-Claude Juncker, the chairman of European Finance Ministers, has stated that Greece may not receive further IMF funding because it is unlikely to be able to guarantee its funding over the next 12 months.

He is quoted in the Telegraph:

"The IMF can only be active when there is a refinancing guarantee for 12 months."

Needless to say, this statement caused a fall in the Euro and flight from Greek debt.

Greece realises that it is staring into a financial and political abyss. Maria Damanaki, European Commission's Greek representative, is quoted by AFP:

"We either agree with our creditors on a programme of tough sacrifices that brings results, and assume the responsibilities for our past, or we return to the drachma. The rest is secondary under today's conditions."

Either way, Greece is facing a lousy choice. This of course would not have happened had previous Greek administrations not falsified their economic statistics in order to gain entry to the Euro club.

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