Quote:
Originally Posted by GP_Matt
If Greece does transition to a new currency, does anyone know what happens to their debt?
Would their mortgage/credit card/car loans be owed in Euros or would they be converted, along with their savings accounts and paychecks, to Drachmas?
If they stayed in Euros and the Drachma tanks there could be a huge round of personal bankruptcies throughout the country during the transition.
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They'll try to negotiate some debt forgiveness, but I doubt that the Euro's and banks would be in a mood to listen, especially since there was a 50% write down if I recall not that long ago.
I would think that their savings accounts and paychecks would convert, which would mean a lot of lost value, especially outside of Greece.
Basically the Drachma would have the value of a rock outside of Greek borders, and inside of Greek Borders, they would probably not have a great deal of actual buying power compared to the Euro.
Just an assumption though.
The biggest step would be that Greece would leave the Eurozone, produce their own currency and then declare bankrupts to get out from under their debt, which mean that their ability to run a deficit would be zero because nobody would loan them money or buy their bonds and currencies.
The only organizations that would lend Greece money at that point would be the money mart in France at credit card interest rates (joking)