Markets reacted swiftly to news Greece could soon be leaving the Eurozone. Investors bailed their portfolios of European equities. Falls of 3 per ent were posted by the Madrid stock exchange, 3.3 per cent in Paris, and a whopping 4.9 per cent in Milan. By the end of trading the euro had sunk to a nine-year low.

Greece has threatened to leave the Eurozone several times previously; playing the game of brinkmanship to its own advantage.

The latest threats come from the poll-favorites Syriza, led by firebrand politician Alexis Tsipras. He is a vocal opponent of further austerity measures in return for more bailouts. The European Union, European Central Bank, and International Monetary Fund imposed harsh austerity measures in exchange for 240 billion ($A 352 billion) loans to stabilise the floundering Greek economy. But the austerity measures have had crippling social consequences.

For a Greek political party to oppose austerity measures and default on these loan repayments is nothing new. In fact, the announcements by syriza were met with cautious sceptism from international economists. What has given this threat of leaving the Eurozzone teeth is a report by German magazine Der Spiegel that German Chancellor Angela market was ready to let them go.

Should the far-left political party of Syriza win the January 25 election, the magazine said, and reverses the current austerity policies, then Greece would have no place in the Eurozone.

A Greek government refusing to pay its debts and meet the requirements for further bailout packages would be cut off and cut out like a tumor. And if the Greeks thought the austerity measures were bad they haven’t seen anything yet.

Should Greece default on a loan repayment and leave the Eurozone there would be a rush on the banks, as everyone attempts to withdraw their funds prior to the Greek troika plummeting. Billions of dollars-worth of international investment will be sucked out of the economy for the same reason. The government would quickly need to enact laws preventing the flight of capital and issue a new currency as the currently used euros would be worthless. The new currency, however, would be a virtual pariah to investors; so to prop up its falling buying power more of it would need to be produced. And more; and more … The attendant hyper-inflation would devastate the country.

With the rise of far-left parties in Spain and Italy and the strengthening of far-right factions in France and Germany many have speculated that European governments are “making an example of Greece” by letting them go.

It will be a harsh lesson.

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