Greece’s Debt Crisis Dilemma: Stay or Go?!

Hello,  my name is Andrew Martinho. I am a senior account manager at eToro and an established trader of the markets. This is going to be my first blog with eToro but I can tell you that there will be many more on the way.

There are many interesting topics of conversation in the markets now but I think the main worry is Greece and the impact of their exit from the Eurozone, so I will try and point out the consequences of a Greek exit.

Reasons that Greece should stay in the Euro

If Greece were to stay in the Euro this would halt fears of contagion to other Eurozone countries and bolster and strengthen the currency, maybe this would be a partial band aid that would stem the flow and halt bleeding temporarily – who knows? If this were to happen then we could see Euro rally 500 to 1000 pips against its counterpart, the USD.

Looking at the departure of Greece from the Eurozone is unpalatable to other countries because they are still running such a large budget deficit, which means a default cannot be done because the Greek government would still need to borrow money for public sector services such as police.

Reasons that Greece should exit the Euro

Most traders and analysts would prefer that Greece should leave and allow the other countries inside the Eurozone time to recover and address their own budget issues. When the Euro first came into circulation many people including myself agreed that the process had been rushed and not correctly thought out.

How could Greece leave the Euro?  Great question; this is an unprecedented situation.  We don’t have a legal mechanism in place to do this; I believe that the European Central Bank and IMF would have to sit with Greek authorities in order to do this successfully.

If this were to happen it would be a disaster for Greeks, who would inevitably revert to the Drachma.  I believe that the Drachma and Euro would go 1 to 1 initially and then once the currency markets were to get their teeth into the situation the currency would dramatically fall, who knows where it would go.  I think 1000 pips down on the Euro would be a great estimate.

I am not going to go into a full analysis of this subject because it has been covered by so many analysts as this is the main focus of the markets now.

It has been great writing this review for you; I will be back with another review soon so stay tuned.

Just one last thing; one of my clients enjoylive sent me a picture he made which I think describes the way which novice traders approach the markets.  I will be writing a blog in the future and will talk about the picture in relation to entry points.