The research company looked beyond just the existing levels of debt that would be wiped out and considered the decline in economic activity in 42 economies around the world as well.
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New York, NY (PRWEB) October 24, 2012
In a recent Investment Contrarians article, editor Sasha Cekerevac states that the costs associated with breaking up the eurozone might be far higher than most people realize. Cekerevac reports that a new study by research company Prognose has estimated that the departure of Portugal, Greece, Spain, and Italy from the eurozone would cost approximately 17.2 trillion euros, or US$22.3 trillion, by 2020. (Source: “Euro Exit by Southern Nations Could Cost 17 Trillion Euros,” Spiegel Online, October 17, 2012.)
“The research company looked beyond just the existing levels of debt that would be wiped out and considered the decline in economic activity in 42 economies around the world as well,” notes Cekerevac.
While the company does state that an exit by Greece alone would have a minimal effect worldwide, it would have a serious effect on all markets, including America’s if the financial crisis were to spread to other nations within the eurozone, reasons Cekerevac.
“The company estimates that if Spain were to leave the eurozone, it would cost America 1.2 trillion euros in lost gross domestic product (GDP) by 2020. The firm states that if Italy left, the cost of the eurozone financial crisis would be even more catastrophic for all nations around the world, including the U.S.,” reports Cekerevac.
Obviously, Cekerevac notes, these are just estimates and, considering the unprecedented nature of the financial crisis, a eurozone break-up would be extremely difficult to fully calculate.
However, the Investment Contrarians editor states that the costs of the financial crisis if the eurozone were to fold would be quite severe, including the debt not repaid, the hit to the financial system, and the loss in economic activity and wealth within those eurozone nations that had left. Obviously, the currency of any nation that leaves the eurozone will sharply decline in value, which would mean a massive drop in imports and a historic loss in wealth, he adds.
“Hopefully, eurozone members are aware of the costs if the financial crisis should escalate, and are doing their best to not only plug the holes but to also make the necessary structural reforms to prevent a break-up from occurring. However, time is running out,” Cekerevac concludes.
To see the full article and to get a real contrarian perspective on investing and the economy, visit Investment Contrarians at http://www.investmentcontrarians.com.
Investment Contrarians is a daily financial e-letter dedicated to helping investors make money by going against the “herd mentality.”
The editors of Investment Contrarians believe the stock market and the economy have been propped up since 2009 by artificially low interest rates, never-ending government borrowing and an unprecedented expansion of our money supply. The “official” unemployment numbers do not reflect people who have given up looking for work and are thus skewed. They believe the “official” inflation numbers are also not reflective of today’s reality of rising prices.
After a 25- to 30-year down cycle in interest rates, the Investment Contrarians editors expect rapid inflation caused by huge government debt and money printing will eventually start us on a new cycle of rising interest rates.
Investment Contrarians provides unbiased research. They are independent analysts who love to research and comment on the economy and investing. The e-newsletter’s parent company, Lombardi Publishing Corporation, has been in business since 1986. Combined, their economists and analysts have over 100 years of investment experience.
Find out where Investment Contrarians editors see the risks and opportunities for investors in 2012 at http://www.investmentcontrarians.com.
George Leong, B. Comm., one of the lead editorial contributors at Investment Contrarians, has just released, “A Problem 23 Times Bigger Than Greece,” a breakthrough video where George details the risk of an economy set to implode that is 23 times bigger than Greece’s economy! To see the video, visit http://www.investmentcontrarians.com/press.