When Greece Fails?

How do you prepare for a massive default that the EU says won’t happen, many have bet against, and yet common sense seems to sustain?

Bank of America Merrill Lynch has looked into filling trucks with cash and sending them over the Greek border so clients can continue to pay local employees and suppliers in the event money is unavailable. Ford has configured its computer systems so they will be able to immediately handle a new Greek currency.

No one knows just how broad the shock waves from a Greek exit would be, but big American banks and consulting firms have also been doing a brisk business advising their corporate clients on how to prepare for a splintering of the euro zone.

via U.S. Companies Conduct Fire Drills in Case Greece Exits Euro – NYTimes.com.

And in a related story, we see the similar weakening–and human turmoil–beginning in Spain and after the fact in Irish real estate.


5 thoughts on “When Greece Fails?”

  1. Why hasn’t the European economic crisis been more of an issue in our own presidential debates? Are we so naïve as a nation that we believe that even in a world as interconnected as our own the US won’t be harmed by a Greek exit from the EU? Why aren’t Obama and Romney discussing how they will react when Greece fails?

  2. Walking in the streets of Athens a year ago felt like strolling around the no so charming metropolitan areas of Sao Paulo, minus the Acropolis. Food prices were the lowest I will probably ever find in a major Europe destination. Lodging prices were not bad either and it was easy to tell that the average population was struggling economically just as much as the people in my own country. Although it saddens me to see such a marvelous country in peril, it gives me the sense that Greece and probably most wealthy countries in the world, needs a reality check. Ever crescent housing prices, mindless spending, non-existing savings, it is not sustainable, but it is a recipe for disaster. Although Greece’s threat to part from the European Union sounds alarming and dangerous for the health and success of the European Union, it may serve as an example of how things may turn out if the other EU members are not careful with their economic decisions going forward. (http://online.wsj.com/article/SB10000872396390444273704577636950491117934.html)

  3. Things in Greece are definitely looking pretty bleak. If the Greek economy does fail, it will be interesting to see how the rest of the EU deals with this crisis. The failure of any constituents of the EU will greatly impact the US – if the euro fails, the dollar won’t fair too well considering the EU is a biggest trade partner. It’s also interesting to note that the problems facing Greece are not isolated events. Spain and Italy are also on the brink of a financial crisis – Spain’s unemployment rate is at a record high and its banks are beginning to prepare by provided the peseta (the currency used by Spain before the euro.) Iceland experienced a similar financial crisis in 2008 and things are getting better – I don’t see the euro failing, but I do think that some countries are no longer going to be members of the EU by the end of this decade.

  4. This to me is an interesting situation in which companies have to plan for a change that might never happen nor do they know what to completely expect. The world needs to take this as a wake up call and start to look at nations economies more seriously. I agree with Katia that a reality check could be a good thing in the long run. We need to look more seriously at how to manage the worlds money and get savings/debt in order along with the unemployment rates.

  5. It is really interesting how many companies are taking actions with respect to the possibility of Greece leaving the EU and therefore acquiring a new currency. Although Greece’s change in currency might not affect greatly American companies, it would be important to recognize that it will take around four months for Greece to change the currency. The consequences of the change in currency are greater since there would be higher inflation and the currency will lose its value. These consequences would have an impact on many companies no matter what. BBC News has an article called How would Greece leave the Euro, which states many of the difficulties that come with the change in currency. At this point many do not know what would happen with Greece since it would be really complicated for them to change the currency but at the same time it would be a problem if they default. Right now, the actions of American companies such as JPMorgan chase are necessary so whatever happens with Greece will not affect them greatly.


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