The word is out that the European Union (EU) would have a major problem in its hands if the Greek nation left its affiliation by itself. The financial markets would deliberate on the fact that other debt-ridden nations including Portugal, Italy and Spain would follow suit. The euro would likely experience a major jolt as investors will run for cover to the US dollar and EU leaders would have to play the role of the savior or see the euro drop like a stone.

Here is some food for thought. If all the Mediterranean members of the Euro zone left the EU, then the picture would change dramatically. In turn, the EU would comprise of only the so-called ‘strong members’ of the zone. Their balance of payments would either show a surplus or, at worst be at balance. This would not be an easy cake because a political debate over each nation would certainly ensue, causing turmoil in the domestic and international financial markets alike until the departure of these existing members. Once they also pack the bags, the euro would rise against the dollar as money will leave the US (amidst its own debt/political crisis) to return to the other side of the Atlantic. This process would be deemed harmful to international trade as the price of the euro would make many European nations exports uncompetitive overseas.

The EU members might yield to temptation to impose protectionism to preserve its international trade position and the economic health of its members. Recent memory suggests that similar actions are possible with the examples of Japan and Switzerland where a currency’s value can be sacrificed to protect the trade position of a nation, or group of nations. The European banking system would suffer a series of body blows which could bring many of them down and set off a chain effect on US banks due to the interconnectedness of their finances. The only way out of that financial explosion would be to inflate out of it through a degree of money creation far beyond our imagined levels. It will take time after the money injection in regaining the glory days. The euro-zone would never be the same again.

While the world is thinking of the events far across the distance, the denizens of Kathmandu Valley are excited about the prospect of watching the Danish Band MLTR in our very own Tudikhel ground. People have poured in from all walks of life to the capital in order to catch a glimpse of this band performing live tomorrow. The event managers need to be applauded for bringing international stars like Bryan Adams and MLTR to our country and this trend should continue in the future. Have a great weekend everyone!