What was once dismissed as unthinkable is now talked about openly. Greece could leave the euro. In fact US bank Citigroup puts the chances of an exit within the next 18 months at 75 percent.
So now experts are not just speculating about if it will happen, but what will be the result.
“Political chaos and social instability will follow”, says George Tzogopoulos of the Hellenic Foundation for European and Foreign Policy. “Small business and enterprise will become immediately bankrupted, and the new Greek currency will be devalued, so its very difficult to see how people will react.”
Analysts have come up with a scenario whereby a newly introduced drachma would suffer an immediate 50 percent drop in value.
A predicted reduction in GDP of 20 percent would follow.
Inflation would soar to 50 percent with debt rising to over 200 percent of GDP.
Even without a euro pull-out, unless some political stability returns to Greece soon, the European Central Bank along with the IMF and EU could stop the bailout money, effectively crippling Greece.
The problem is some analysts believe that such drastic action could end up forcing Greece out the euro.
One Greek newspaper declared at the weekend: “We’re a breath away from the drachma and disaster.”