Greece is in a hopeless position. Leaving the euro would solve the competitiveness problem but as one speaker put it, Greece has no great industries that could take advantage. And euro departure would lead to inevitable default in any case, since its debts are denominated in euro terms. It would cause a financial crisis as Greeks took their euros out of domestic banks and stashed them overseas (it would be interesting to see whether this is happening already). Default would cut the Greeks off from the markets, requiring the country to balance its budgets meaning they would still have to impose an austerity programme. And euro departure might also cut the country off from official support from the EU.
Default within the euro would still leave the economy dependent on its neighbours but at least the Germans and the ECB would have a more secure claim since private sector claims would be heavily discounted. But the problem is what to do about the Greek banks that own government debt; they would need rescuing as well. Of course, the reason Ms Lagarde is so wary of Greek default is that it might prompt a further run on Ireland, Portugal and (worst of all) Spain.
Muddling through and hoping for the best is the strategy but it ain't going to work. The Greeks won't wear it (there's another national strike today); the markets won't wear it (three year Greek bond yields are nearly 25%); and German voters won't wear it either.
Economist - full
σχόλιο, ένα από τα πολλά που γράφτηκαν στο ποστ
How about hanging all the Greek politicians and bank executives? Problem solved.
Default within the euro would still leave the economy dependent on its neighbours but at least the Germans and the ECB would have a more secure claim since private sector claims would be heavily discounted. But the problem is what to do about the Greek banks that own government debt; they would need rescuing as well. Of course, the reason Ms Lagarde is so wary of Greek default is that it might prompt a further run on Ireland, Portugal and (worst of all) Spain.
Muddling through and hoping for the best is the strategy but it ain't going to work. The Greeks won't wear it (there's another national strike today); the markets won't wear it (three year Greek bond yields are nearly 25%); and German voters won't wear it either.
Economist - full
σχόλιο, ένα από τα πολλά που γράφτηκαν στο ποστ
How about hanging all the Greek politicians and bank executives? Problem solved.
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