Dumb it down

Things aren't looking too good for Greece and the economic pariah of Europe is stumbling through the process of trying to get its second bailout of €1.35 billion.

Today the Conservative leader of the European Parliament well and truly stuck the boot in and recommended his colleagues prepare to kick Greece out of the Eurozone. Sounds drastic, but what would actually happen if the Greeks left the Euro party?

What would the Greeks do if they had to leave the Euro?

Well, there'd be a pretty big breakdown of the whole system. The money would literally fly out of the country, the Government wouldn't be able to borrow or even pay anyone. Pretty quickly the Government would collapse and be replaced by a new unity one.

They would have to immediately reinstate Greece's previous currency, the Drachmas. No easy task when you consider it hasn't been legal tender for 10 years. New currency would have to be printed with breakneck speed.

The default would effectively be a sovereign debt default, but would allow the country to devalue its own currency.

Would all that be a bad thing?

There's not really a conclusive answer to that. The most recent country to make such a move was Argentina, but they were even more stable that Greece. But, it would mean Greece would be a fantastically cheap place for tourists, manufacturers and businessmen. The country would remain on the periphery of Europe in all sense of the phrase, while becoming a lot more competitve.

Is Greece leaving a bad thing for us?

Most likely the answer is a firm yes. Even on a basic level, Greece is currently deflecting a lot of negative attention from us at the moment. It would also raise the domino affect issue of 'who's next to default', which would be unwelcome for both Ireland and Portugal, the next two countries in line.

On an economic level a Greek default would shake the all-important market confidence in the bailout countries. Ireland is currently regaining some confidence from the international community and becoming more competitive again. Greece leaving the Euro would probably not be the best news for us.

How likely is it?

The whole nub of the question is the likelihood of it all. Right now, even though there are a lot of mutterings from Eurosceptics and others, there is little or no appetite for Greece to leave the Euro.

Greek leaders would probably lose their positions of power, so they don't want it. The Eurozone would come under threat, so European leaders don't want it. And the whole idea strikes fear into most of the ordinary people of Europe, so no joy there either.

A default is the most undesirable option for the majority of parties involved, so it's incredibly unlikely under the current circumstance. But, if there's one thing we've learned over the past four years - don't try to predict too far ahead.