World on their shoulders, Greeks face epic choice

ATHENS — Homeward bound after the Trojan War, Odysseus of Greek myth had to pick a path through seas harboring a monster with six heads and a whirlpool that digested ships whole. Now, whether modern Greece exits the euro — potentially triggering global economic turmoil in the process — depends on the tough choices of Ivi Moreti and her 11 million countrymen.

Should the 60-year-old widow leave her nest egg of euros in a wobbly Greek bank and risk it being seized and converted into a devalued national currency? Or should she withdraw it all, joining what could become a panic forcing Greece out of the euro anyway by bringing down the financial system?

Graphic

Unemployment and Europe’s fallen leaders

Latest stories from Foreign

N. Korea fires 3 missiles into sea, South says

Chico Harlan

Launch of missiles a test to recent calm after period of heightened tension.

E.U. farmers fear trade deal could open door to GMO crops

Michael Birnbaum

Concerns over genetically modified seeds could cripple talks that aim to boost European, U.S. economies.

Dollar rises in socialist Venezuela

Juan Forero

After losing value for years, U.S. currency is thriving in the fast-wilting economy Hugo Chavez left behind.

World Digest: May 17, 2013

Bombs kill 9 in gated community in Afghanistan; E.U. survey reveals many gays in bloc live in fear.

China’s anti-Japan films scrutinized

Kathrin Hille

FT.com | Beijing censor sees no artistic merit in TV dramas inspired by decades-old bilateral tensions.

Who should she vote for June 17, when this nation mired in political chaos holds its second election in two months? A party willing to largely accept the crippling bailout conditions that have taken a bite out of her pension and run the economy into the ground? Or the rising rebels promising to buck the austerity imposed on Greece by its bigger neighbors, , a course that might cause total economic collapse?

For Greece — and Europe — her decisions have never mattered more. “We are just a small nation,” Moreti said, ruminating at a cafe overlooking the azure Saronic Gulf. “But if we go down, this is going to be bad for everyone.”

Nations have left currency unions before — Ireland, for instance, ditched its ties to the British pound on the road to 20th-century independence. But if Greece is forced to exit the euro, global markets could be thrust into uncharted economic territory for modern times.

The damage would start — though certainly not end — with the likes of Moreti’s wallet. Moreti, who like many here is terrified of losing the stability of the euro, would almost surely watch as a new Greek currency precipitously devalued, while interest rates and inflation soared. Prices of imported goods — such as her medication for diabetes and osteoporosis — would surge. As Greece entered full economic collapse, a far more severe social crisis could ensue. Recent bouts of low-grade homegrown terrorism could spike. Economic paralysis, many here argue, might create a quasi-failed state on Europe’s strategically vital southeastern frontier, from which more and more illegal immigrants from the Middle East and Asia could stream into the European Union.

At the same time, Europe could confront a broader threat, with the chink in the euro’s armor undermining reassurances from European leaders that bigger troubled economies such as Spain and Italy would not be the next to exit.

A worst-case scenario

Greece’s woes have been a train wreck 2 ¹ / ₂ years in coming, giving Europe time to prepare for a Category 5 economic storm. But there are increasing signs that a rupture in the euro will prove devastating. Panicked investors this week, for instance, began dumping shares of Bankia, Spain’s second-largest bank by domestic deposits, amid fears of a run on deposits. Facing its own fast-escalating banking crisis, Cyprus may soon need to follow Greece, Ireland and Portugal in seeking a bailout.