Reasonable questions and serious concerns about the future of Greece's economy have resulted in some presenting a Greek exit from the euro zone as if it were redemption for the Greek people, the ideal mean for the relaunch of the Greek economy. Obviously, fueled by obsessions or other motives, they overlook the views of the overwhelming majority of analysts, that point to the exact opposite conclusion.
More specifically, in the case of a Greek exit from the euro zone, the rate of our new national currency will be much worse than the one appointed when we joined the common currency. There is an even more worrying prediction that immediately after exiting the euro zone our new national currency will be devalued further at least by half, with a respective reduction of the purchasing power of Greek households.
Furthermore, it is obvious that the Greek banks will no longer have access to the Emergency Liquidity Assistance (ELA), which covers the dramatic outflow of deposits.
In such a case, an inevitable consequence will be the enforcement of capital controls over the banking system on the part of the government, in order to prevent the massive fleeing of those deposits that are still in the Greek banks.
Another negative consequence will be the dramatic surge of inflation, resulting in outrageous prices for basic goods. This will happen because, with the rapid devaluation of our national currency, imports will become very expensive and the high prices will be diffused to the economy, creating a suffocating framework of unbearable accuracy.
In such a negative economic environment, it is certain that a large number of enterprises will close and unemployment will exceed even the most pessimistic forecasts.
Apart from the many issues stated above, while the internal debt could convert to the new national currency, it is not allowed to do the same with our external debt, which will remain in euros. However, since the tax base of the Greek economy will be based on our devaluated new national currency, it will become prohibitive even to pay the interest on our loans in euros.
According to recent data, Greece will remain trapped in a vicious circle of recession, since a relevant study by the IMF forecasts further recession of 8 percentage points in case of default.
Moreover, the Greek public system, not being able to satisfy the demands of the holders of Greek bonds that were issued after the process of the PSI, will be led to lengthy litigations, just as in the case of Argentina.
The only ones who would benefit from a potential Grexit, would be the foreigners, since after a Greek default, they would buy real estate, companies and other assets of the private and the public sector at a bargain price.
The consequences of a Grexit would cause a huge shock to the economy and society, while there is unrest in the Balkans, the Turkish provocations in the Aegean intensify, scores of irregular migrants are flooding the country and crucial national issues remain open.
Some might characterize the above predictions as excessive or as a product of alarmism. I hope that the discussion on Grexit will remain at a theoretical level and that the Greek people will not experience the real consequences of a default, because these consequences may eventually prove to be even worse than what I mentioned above. Greeks have already gone through unprecedented sacrifices in order to avoid an exit from the euro zone. If the potential Grexit is a big problem for Europe, for Greece it is nothing short of a disaster.
This post first appeared in HuffPost Greece and was translated into English.