-------------------------------------------------
Policy Paper, spring 2012
-------------------------------------------------
Is a Greek exit from the European Union inevitable?
0909512

Table of Contents Pg.
List of Illustrations 3
Executive Summary 4
1.0 Introduction 5
2.0 The Economic Cost and Benefit for State Membership of the EMU 5
2.1 Benefits of EMU Membership & Mechanisms 5
2.2 Costs of EMU Membership 7
3.0 Contextual Factors: The Profusion of Dept 10
3.1 The Eurozone Crisis 10
3.3 Greece- The Forefront of the Euro Area Crisis 13
4.0 Alternate Policies and the Effective Consequences 15
4.1 Predicament 15
4.2 Abetting Dependent on Austerity 16
4.3 Creditor-Led Default 17
4.4 Debtor-led Default and Greek Haircuts 19
4.5 Greek Exit 20
5.0 Recommendation 21

Appendices: Appendix 1: Preferential liberalization
References

List of Illustrations Pg.
Illustration 1: The cost of EMU- Diminishing Domestic Flexibility to Asymmetric Macro Shocks 7
Illustration 2: Cost and benefit of Monetary Unions 9
Illustration 3: Evolution of Nominal Unit Labor Costs in the Eurozone Pre to the US Credit Crunch 9
Illustration 4: Current Account Balances in Percentage GDP 10
Illustration 5: Core Bank Exposure to the Weaker Eurozone Member States 12
Illustration 5: Holders of Greek Government Bonds and Dept (in billion Euro) 16

Executive Summary
The standing Economic and Finance minister of Germany has commissioned the policy paper for the forthcoming Council of Economic and Finance ministers meeting. The policy undertakes a consideration of whether Greece should exit the European Union on economic grounds.

Currently, the Greek dept crisis is infecting the rest of the EMU member states and