Greece- 'I Owe U'.

The problems of the Eurozone are deepening with each passing second. With Athens being unable to form a new governmental structure the whole of EU is on a standstill. While the Greek aren't able to decide their leaders the EU doesn't have an authority to talk to. It's a very primitive but important concept. A leader is chosen to represent one group of people in a community where they want to be represented. Here they would need a government and their head would represent himself in front of the EU and discuss the fate of Greece. Right now as Greece doesn't have a leader, the EU cannot do anything substantial because whosoever comes into power will have a certain basic set of ideas. These ideas will be either pro-bailout and austerity (highly unlikely) or against austerity that cannot be determined.

Right now one thing that Greece has shown a positive surety on is its will to stay with the European Union. According to some polls 75% of the Greeks want to stay with the the European Union but the basic point is that they don't have a leader who can represent them in the forum and settle the finances. If this continues and the next elections are held in June then a leader needs to come out clearly enough to match up to the requirements of the crisis and contain it. The question till that time is- 'How will Greece sustain till that time without funds?'. While the external funds are cut off it is going to be very difficult for the Greeks to sustain and if 'Grexit' (Greece+Exit) happens then the fall in the value of Euro is an undeniable truth.

A solution(temporary) that the Greek's might come up will have to be issuing of IOU's. IOU's are actually a note which acknowledges the fact that- 'I Owe U' the same way as the government of California did in 2009 when it underwent a severe financial crunch. The basic difference between a cheque and an IOU would be that it is much more informal, although it might have watermarks and seals but it won't have a specific date of repayment and it is not necessary that it is to be exchanged for a currency. In certain cases it might be used as a means of exchange to get certain goods as well.

The problem with this is that firstly if Greece issues such a 'promissory note' acknowledging its so called debt, which currency will it correspond to? Although I do understand that I have myself said that it is not necessary that it is exchanged for a currency but even if the Greeks 'acknowledge' that they owe some money to someone, then they would still have to mention a currency to which they will correspond and finalise the repayment. It worked for California because no matter what would have happened, at the end of the day the account would  have been settled in terms of USD but the same doesn't stand for Greece. The second is that with the rumors about 'Grexit' (or being thrown out of the EU) are still afloat. Hence the investors wouldn't know which currency would they get their returns in if they accept the 'promissory notes'. If a scenario comes up where Greece is out of the EU then Drachmas will be followed and the depreciation which would occur to it after it is relaunched is unimaginable.

The investors are very unsure of what to bet on and what to bet against. With 'Mr. Normal' stuck in lightning while going to Germany, Greece's political turmoil and 'Grexit' on cards. What is going to happen to the European Union? Is it the end of Super-Bloc? Or will something magical happen and save this Greek EU relation-ship from sinking?

Photo: A replica of one drachma.