THE THREAT OF A GREEK EXIT The economic crisis looming large in Greece and the possibility of a Greek exit

from the euro zone, referred to as grexit makes a good topic for discussion and review at present. The huge government deficit has begun to reflect in the rising bond yields(to 22.9% from 20.5% at the end of April) and the plunge of the stock market; which may well trigger bank runs in the future if citizens feel their deposits might be devalued. This is a problem which requires urgent attention from the high priests of European orthodoxy. The tough austerity measures specified in the second bailout package may all but stimulate growth which is required for banks to remain healthy so that repayment of debts becomes possible. It has been received with protests at home in Greece over wage cuts and the political stalemate has not made things much better with the Radical Left wing party of Greek politics, if they come to power, having a high proclivity towards an exit rather than adhering to stringent austerity and sovereignty of Germany and the like. A return to the drachma, if it happens, has serious economic implications for Greece and euro zone with high risks of hyperinflation and losing of a single-market access for the nation not the least of them. Not to mention European taxpayers standing a chance of losing their money when there is no possibility of repayment. Also there is a chance of liquidation of many business firms both home and abroad. Then there is a wider threat of the contagion spreading to weak economies like Ireland and Portugal which may follow suit. All this can be averted by prudent measures which are being suggested by experts to be taken sooner than later. One is the ratification by Germany and some countries, of the permanent rescue facility, European Stability Mechanism, due in July, which along with the European Financial Stability Fund would increase total lending capacity to $500 billion to provide a fiscal stimulus for Greece. Then there is a proposal for federal deposit insurance and regulation, bank supervision and recapitalisation which would regain investor confidence. Thirdly, there is the solution for mutualisation of limited amount of debts over a limited period of time by provision of narrower Eurobonds by euro zone economies with over 60% of public debts to GDP. These challenges that lie ahead in keeping the euro zone intact and are indeed tougher than they seem. While Greece is already on a path of bridging deficits, the stop of money infusion would cripple the economy and push it towards the edge of a cliff .The question is whether the Germans, Austrians and Dutch feel solidarity with Greece to pay up not only to keep the nation afloat but also in the bigger interests of the euro zone to prevent any immediate repercussions arising from a possible grexit in the countries of Ireland and Portugal and also in the reeling economies of Spain and Italy.