Greece, the Euro and London’s economy

The big news is from Greece.  The Olympic flame has been handed over and will make its way to London for the opening ceremony of the 2012 London Olympic and Paralympic games.

Meanwhile the country moves into a period without a stable government, the contrast between the calm and serene torch ceremony and the turmoil in the Greek political world could not be more stark.

My prediction is that anti bailout parties will win a majority in the Greek parliament when the election is re-run, the new government will refuse to abide by the terms of the international bailout and will be forced to exit the Euro.  In the short term this will be very bad news for everyone.

Greek and Spanish banks are already seeing people taking huge sums of money out of their accounts and the banking shares have fallen accordingly, the opportunity for an orderly exit from the Euro has probably past and a disorderly exit will hurt all European economies.  Yet it is probably still the best option.

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