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What the prime minister of Greece means when he says a euro zone exit would be 'catastrophic'


A euro coin stands on a map of Greece. Many fear that a Grexit from the Eurozone would worsen the crisis.


Sean Gallup

Today in Athens, Greek Prime Minister Antonis Samaras said that a Greek exit from the euro zone would be "catastrophic."

What did he mean?

Well many people have predicted that a Grexit would lead to another leg down in the economy, but there's also a political angle.

Earlier in the week we posted the thoughts of a Greek hedge fund manager, who commented on the likely outcome of elections if Greece left ...

Such elections would see a radical left Syriza victory and a very good showing from the neo-Nazi Golden Dawn party. If the Germans decide to continue aid to Greece and a more tenable solution is worked out (including possible ECB and euro debt haircuts/restructurings and bailout extensions), it would be considered a victory for the coalition government and we would see elections again in 2-3 years. In which case Syriza would probably win but not as a radical left party but as a re-incarnation of the dying Pasok party. While elections are no guarantee in the next few months I think Greece will be the source of some dramatic headlines in the near future.

So right off the bat, it's very plausible that an eleciton would cause a huge surge in the radical parties (which both did very well in this summer's election), and so that would make for something of a Democratic crisis there.

Today after Samaras' comments, we talked to Greek hedge fund manager Jason Manolopolous, author of the book Greece's Odious Debt.

His description of catastrophe was far more severe.

He told us: "If Greece left the euro zone here, there would be helicopters dropping food.. The whole machine would break down.There would be garbage on the streets."

Rather than elections, the three things everyone would be thinking about would be "getting fuel," "getting food," and "creating security on the streets."

Unlike in Italy, which is used to endless political upheaval, Manolopolous argues that Greece is not well equipped to have a functioning government during times of major politcal turmoil.

As for the negotiations going on, Manolopolous denies that any negotiations will really happen. Instead it's just about whether Germany wants to toss Greece a bone or not. Samaras has no leverage.

And even if Greece does get a reprieve of several months, he says: "Sooner or later we're going to have the issue ... we'll have 27-28 percent unemployment. And idle hands are the work of the devil."

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