-UBS Group AG
While couple of hours remain till the emergency gathering of the Euro zone finance ministers and the Greek officials, the odds of Greece's exit from the Euro zone are increasing. The repercussions of a Eurozone break-up could be catastrophic for both the European and world economies. Thus, finance chiefs started talks at the G20 in Turkey to try to strike a deal between Greece and its main creditors. Some experts believe that the Euro zone is not only strong enough to withstand Grexit, but would also benefit from it. Others are not so optimistic, as they see the European Central Bank would be left holding billion of euros of Greek debt, while investors would liquidate their European assets, creating a cash-flow problem and triggering deflationary spiral. Moreover, if Greece left the currency bloc, other debt-stricken economies including Cyprus, Ireland, Portugal, Spain would be viewed as a potential candidates to follow Greece's example. However, things would have been different today, if Greece saw its debt restructuring in 2010 instead of 2012. Greece's debt-to-GDP would have been 30 percentage points lower today, according to Thomas Philippon, Professor of Finance at Stern School of Business. Yet, the reality is that the global economy may not be strong enough to weather a Greek exit and full-blown European crisis, even despite the fact that the global economy and the US economic engine, in particular, are stronger than they were during the last Greek crisis back in 2012.
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