A short note on Greece

Just a short note on Greece because at the moment I’m concentrating on writing revision guides.

For several years I have felt that Greece would be better off to leave the Eurozone. This is partly due to economics, but also partly an intuition – that there is no greater recipe for political disaster than having disastrous economic policies dictated by a foreign power (EU, IMF, Germany)

The frustration in Greece at Europe is well-merited.

  • Leaving the Eurozone will perhaps make Greece masters of their own destiny. They will not feel they are under the thumb of Europe (aka Germany)
  • Leaving the Eurozone gives the possibility of a better long-term framework – which doesn’t involve common monetary policy, exchange rate and fiscal austerity.
  • Staying in the Eurozone offers only an endless diet of self-defeating austerity is a recipe for deep frustration – it is hard to see any hope.

I’m conscious of the fact I that the consequences of default and Euro exit will be equally damaging – if not more so in the short/medium term. I’m also conscious of the fact – I’m not quite sure what will happen. There are not many precedents of developed economies going through such difficult times. There is the very strong likelihood of it being very grim for a considerable time. But, it should be remembered you can always come out of the worst crisis. Germany’s own hyper inflation was devastating for a couple of years. But, it did recovery.

Failure for Europe

The Greek crisis is not just a failing for the Euro project, but the whole European idea. European politicians will want to blame the irresponsible Greeks who had the temerity to ask the population what they thought, but it reminds you of the story about the plank in your own eye.

The incomprehensible desire for never-ending austerity has been wholly self-defeating for both Greece and the Greek creditors.

Time to rescue Greece

Whatever happens, there needs to be a swallowing of pride and a real European willingness to support Greece in this crisis period. A failed Greek economy should be seen as a failure for the whole of Europe.


1 thought on “A short note on Greece”

  1. I’ve always been a bit of a dreamer but:
    The IMF is made up of 188 member countries, each of these countries contributes to maintain the IMF’s funding (the contribution is a quota, a percentage based on voting rights). These quotas paid by our respective governments are raised from taxes paid by the people – therefore IMF loans have been funded by you and me, we have already paid for the debt that we the people are being asked to repay through austerity.
    The World Banks slogan is “Working for a world free of poverty” and their investor brief claims that it is “not a profit-maximizing institution”. Now even I appreciate that the World Bank must make money, in order to finance global needs, but presumably not at the expense of its investors – You and Me !!!
    Wouldn’t a simple solution to world debt (at least for the 188 member countries) be to just knock a Zero off the end of a counties National Debt, or even reduce the debt by the percentage that denotes the countries quota. After all is the people’s money, we are not going to see it back, so just right it off. On paper it’s a massive sum, but in reality it does not exist (other than secured against national holdings, which we the people own), and let the world breath.
    This simple reduction in borrowing would allow the financial flexibility to allow IMF member countries to address their Nation Debt problems and avoid global financial embarrassment.


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