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Comment by jules | Hacker News Reader

Though insignificant compared to the problems that Greece will have.

Don't be so sure.

Greece has a relatively small industrial sector and relies very heavily on imports, which will be completely unaffordable with a new currency. Their huge tourism sector will suffer when they go out of the EU. Their productivity per hour worked is very low. They still have a huge corruption and nepotism problem, an a people who will have to scale back their standard of living. Comparable to the trouble a country like Germany will be in when Greece leaves the Euro? I don't think so.

I'm not disagreeing categorically, but I don't think it's that one-sided.

I was (i) considering the cascading effect of a Greek exit from the Euro, and (ii) thinking in relative terms: I'm not arguing that Germany will be worse off, but perhaps it has more to lose at this point.

Re: the cascading effect:

http://yanisvaroufakis.eu/2011/08/04/why-italy-why-spain-and...

I'm aware that this article describes the dynamics of countries going to the receiving side of EFSF, not of countries leaving the Euro altogether, but I think the perverse dynamics described apply to the latter too.

Relying heavily on exports, as Germany does, may mean you have more to lose in a crisis like this. Consider what happens after a few more European countries stop generating demand for German goods, at the same time that demand from the US is weak too. Demand from the rest of EU and from the US was a big part of what made Germany 'a country like Germany'.

https://www.destatis.de/EN/FactsFigures/NationalEconomyEnvir...

Yes, imports would be unaffordable for Greece with the new currency and that will generate a lot of pain (not that devoting a big share of the national budget to servicing debt is helping a lot), but that will also force the country to correct that imbalance, making what's left of local industry more competitive. That pain would be a price to pay for adapting to a more self-reliant setup, while the one currently being endured (mostly on ideological grounds, I claim) seems more pointless.

Re: tourism, having their own currency to devaluate might help with that.

Re: standard of living, it's not like Greece's current situation, and their prospects within the demands of the memorandum are rosy either.

Corruption and nepotism won't help, but they aren't helping within the Euro either. If anything, those problems are made worse in colonial economies, which the deficit countries in Europe have been, for good and ill, to a large extent.

All in all, a Greek exit from the eurozone is a big lose-big lose proposition for anyone. I don't think it matters a whole lot who stands to lose more. But to the extent that it matters, I think it must be considered in relative terms. Overall, Germany has a better deal in the Eurozone than Greece, and it has more to lose.

Well, Greece has a trade deficit of more than 20 billion on a 200 billion economy. Of that trade deficit, only 1.5 billion or so is to Germany, which is nothing in a 4 trillion economy. I am not sure whether there will be such a cascading effect from leaving the EU. Sure, if Greece defaults on its debts to other EU states, then those states may need to default on their debt themselves, but the market already knows that there is a big chance that Greece will default on its debts or that they need to be forgiven, and Greece is a small country. Even in the worst case when many of the insolvent states exit the EU, the vast majority of German export will still remain. For sure Germany has more to lose if the EU turns into total chaos scenario, but even if there is a big cascading effect it's hard to imagine that, so most of Germany's export will remain even in the face of several states leaving the EU. That's why I think that the life of the average German will not be impacted nearly as much as the life of the average Greek.

You're right though that this discussion of who will hurt more is irrelevant. What has become clear is that a monetary and political union does not result in a more stable Europe. Perhaps the goals should be scaled back to the original goal of increasing trade by reducing transaction costs, rather than trying to have Europe follow the US model.

> Their huge tourism sector will suffer when they go out of the EU.

Would Greece have to exit from EU when it exits euro?

BTW lots of Europeans do tourist trips to Turkey, even though it is not in EU.

Greece would not necessarily have to exit the EU when it exits the Euro, and I don't know what would happen. If Greece exits the Euro unilaterally but wants to stay in the EU I don't know whether expulsion would be likely. There is actually a paper on this topic which argues that it would be possible for a country to leave the eurozone without leaving the EU: http://www.tilj.org/content/journal/48/num2/Dammann125.pdf

Lots of Europeans do travel to Turkey. Funnily enough I am currently on a trip from the EU to Turkey. Here's a few facts to consider:

- I have to exchange Euros to Turkish Liras, and for tourists the exchange rates are not good. - A flight to Turkey cost me about €200 while a flight to Greece is far cheaper even thought he distance is similar. - It's very expensive to call my family from Turkey. Calling from Greece is cheap due to the EU. - My bank card is not accepted everywhere, whereas in Greece I believe it would be. - I have to get a visum for Turkey. - Travel insurance for Turkey is more expensive. - An european car trouble emergency service membership works in Greece but not in Turkey. - The prices in Turkey are far cheaper than in Greece. Greece could adjust their prices to Turkish levels (and likely would have to) after leaving the euro and EU, but then they earn far less of course.

Subjectively I do feel safer in Greece because they are in the EU. Also perhaps some Europeans would not travel to Greece because of perceived anger from Greeks to the rest of the EU, or they wouldn't travel to Greece out of spite if they default on European debt.

That's what I thought too, too: exit from euro does not have to mean exit from EU.

BTW at least in Istanbul - not necessarily elsewhere in Turkey - you'll shop in many places with cash euros. But yes, there are some places where you actually do need liras. For exchanging cash, I've for a long time depended on withdrawing cash from an ATM; the rate is better than in kiosks in almost any country (particularly better than the rip-offs at my home airport which is close to a scam).

Higher flight prices are possibly due to airport taxes and such things, or just random air ticket pricing quirkiness, probably not EU. From where I live, flights to Istanbul that I sampled are slightly cheaper than flights to Athens (distance is practically the same).

It is interesting that Turkey requires a visa from a number of EU countries. A visa seems really simple to get, though (on arrival at airport).

The recent Greek hyperbolic anger against Germans is one thing that discourages me from going there as tourist (I'm not German, but I might be mistaken for one). In that, Tsipras and his crowd are not doing a great service on their country. But maybe it was what they needed to do in order to win elections and then explain why things don't start improving overnight.

Yes, it may be irrational, but I do think that's what many people fear. Even if you don't expect any real problems, the feeling that you are not appreciated in another country can easily make people decide to visit another country instead.

BTW, Turkey recently changed the rules regarding visas; now you cannot get a visum at the airport any more, you need to apply and pay online and print out the application form, which you exchange for a visum at the border. It's still easy, but these small hurdles do add up.

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