All hope is not lost for Greece!

The 3 links below may be of interest to all those who have a sincere interest in the future of Greece. What they have in common is that they focus on ways how Greece, in the words of the EU Task Force, can become a country which is “characterized by economic opportunity and social equity, and served by an efficient administration with a strong public service ethos”. They also have in common that they focus on things which Greeks can do in Greece about and for Greece.

Greece - the way forward

1st Report of the EU Task Force for Greece

A window of opportunity for the Greek economy

The idea of all of this is to turn Greece into a country where a foreign investor who brings his capital to Greece for profitable investment in domestic growth does not experience what this Greek-American has experienced with his investment:

Experiences of a foreign investor

EU Task Force for Greece

Frankly, Greek politicians, media, academia and opinion leaders should be ashamed for more or less ignoring (and hiding from the public) that this Task Force has been at work for nearly 3 months. It has published its 1^st Report recently. The Task Force had been established by the EU so that its resources can be used by Greek authorities to meet 3 great challenges facing the country and Greek society:

1. Supporting growth, employment and competitiveness.

2. Enabling growth through reform of Greek public administration.

3. Maintaining progress towards fiscal consolidation.

The Task Force’s 1^st Report outlines a multitude of initiatives which have been started already. Reviewing them, one can come to the conclusion that the noble goal which the Task Force sets out for itself in the Executive Summary can realistically be achieved, namely:

The Task Force is a resource at the disposal of the Greek authorities as they seek to build a modern and prosperous Greece: a Greece characterised by economic opportunity and social equity, and served by an efficient administration with a strong public service ethos.

I am certain that the vast majority of Greeks would love to hear that there is hope for a Greece characterized by economic opportunity and social equity, and served by an efficient administration with a strong public service ethos. I am even certain that the majority of Greeks would enthusiastically support such a project and contribute to it where they can.

How should the Greek public find out about this project when neither politicians, media, academia nor opinion leaders discuss it intensively?

Let’s assume for a moment the worst-case-scenario happens in Greece: complete collapse of the economic, financial and political systems. The return to a standard of living of decades ago and mass emigration above all of the younger generation would be consequences.

If that happened, how would the present Greek generation justify to the younger one that they did have the opportunity to avoid that but they didn’t take advantage of it?

Is the IIF a Steering Committee?

One can only assume that the Institute of International Finance, Inc. has so far played the role of representing private creditors in the debt negotiations with Greece. Does that mean that the IIF is a so-called Steering Committee?

The IIF is the global association of financial institutions. Josef Ackermann, CEO of Deutsche Bank, is its Chairman of the Board. Charles H. Dallara is its Managing Director. Whether or not insurance companies and other holders of Greek debt are members of the IIF cannot be determined. With a degree of certainty one can say that not all holders of Greek debt are members.

Neither the IIF as an institution nor Mssrs. Ackermann or Dallara as individuals have mandates from all holders of Greek debt to negotiate on their behalf. On the contrary, members of the Management Board of Deutsche Bank have stated publicly that Mr. Ackermann doesn’t even have a mandate from his own bank to negotiate the Greek debt on behalf of the IIF.

So what is this actually? A self-appointed bunch of people who negotiate, without mandate, something which they afterwards inform their members of only to be surprised when their members don’t play ball? Or that other creditors who are not members of the IIF don’t play ball? Whatever the IIF is, a Steering Committee it is not!

A Steering Committee does not consist of managers/executives of bankers’ associations. A Steering Committee is appointed by all creditors of a borrower (whether they are banks or not) and it has a clear mandate from the creditors on behalf of which it negotiates. There are clearly established procedures for internal communication and/or decision-making. And, above all, the negotiations within a Steering Committee are private.

For a Steering Committee to be successful, its membership must balance out the interests of all Greece’s creditors. If, say, South American pension funds were large holders of Greek debt, their interests would have to be adequately reflected in the Steering Committee regardless of the fact that they are not members of the Eurozone nor Europeans.

A Steering Committee does not consist of CEOs who deal a top policy levels. Instead, it consists of professionals who understand the structural details of Greek debt and the various risk positions of individual investors. A Steering Committee does not have “carte blanche” for anything; it always requires eventual approval from the creditors which it represents. Should the Steering Committee be ready to agree with the borrower on something but the creditors subsequently object, then the Steering Committee has to return to the negotiations table.

The Steering Committee, since it is appointed by all creditors, can exercise significant pressure and thereby accelerate the decision-making process. Every creditor can declare his position and even make his demands. A good Steering Committee will deal with all such demands in an efficient manner leading to the result that, at the end of the day, there no longer are open issues. Once that is the case, the Steering Committee can rightfully demand of the creditors which appointed them and whose demands they have adequately addressed to quickly seek internal approvals within their institutions.

Behind the scenes, governments will, of course, informally liaise with the Steering Committee so that a general direction can be followed but under no circumstances should governments appear involved in the negotiations of private sector debt, much less feeling responsible for it.

End result: when a Steering Committee has secured approvals from all the creditors which it represents, it can commit to the borrower. And that is then a commitment which stands! Not a commitment which stands only as long no another party comes up with an objection.

Applause for dealing directly with creditors!

Hear, hear! Greece has allegedly begun direct negotiations with her creditors. Now that would be a giant leap forward in the process of arranging the rescheduling of Greece’s debt! They might even trigger the next step which would be asking all creditors to appoint a Steering Committee with which Greece can formally negotiate.

Normally, countries which encounter debt service problems have to deal directly with creditors from the start. The creditors form a Steering Committee which serves as negotiating partner for the country.

That way, the country’s creditors remain “on the hook” from the start which is an absolute “must” in any debt negotiation.

Normally, a country doesn’t even have another alternative. Should the country, instead, go to foreign governments for help, those governments would – normally – send them right back to the negotiation table with their creditors. “Normally”; that is provided that those foreign governments are not members of the EU who didn’t know what they were doing.

This process of dealing with Greece’s debt problems was, pardon the expression, srewed up from the start by EU-elites. That has led to the perversion that risk-takers could mandate the politicians what to do instead of politicians mandating risk-takers to remain risk-carriers.

It is late in the game for Greece to change strategy and one can assume that not everyone between Paris-Brussels-Berlin will be happy with that. But it’s certainly worth a try.

I mean, those are not boy scouts on the other side of the negotiation table either! They did have the gull, back in July, to call something a 21% haircut when in actual fact it was a ploy with NPVs and, back in October, they had the nerve to insist on a significant increase in interest rates at a time when, again normally, interest rates are reduced to minimum levels.

EU-elites have not had the guts to call the bluff of the financial industry. Perhaps Greece can go down into history for having done that. That would be worth some applause!

Greeks, don't leave the planning of your future up to 11-year old's!

I returned to Greece, this time, in early September and now I have noticed something interesting about my postings to blogs, etc. Until then, my postings were about 9:1 (if not more) in critique of actions on the part of the EU-elites (mishandling the debt problem; the charade of calling something “help for Greece” when, in actual fact, it was a bail-out for banks; turning a Greek-problem into an EU-problem; etc. etc.).

Since returning to Geece, the content of my postings has shifted toward a critique of Greece. Critique of what? For having caused a mess? For having wasted other people’s money? For other similar reasons? Not at all! Instead, a critique of Greece for showing no initiative on her own to do something about her problems. For spending all their brainpower on other people’s problems like the European debt problem.

Savers in the Eurozone now face the realistic risk that at least some of their savings will go out the window. If my savings in Austria go out the window, I will not blame Greece for that. Instead, I will hold the incompetence of EU-elites accountable for that.

What I find inexcusable on the part of Greece and Greeks is that no initiatives are being taken to take their future into their own hands. There are so many things which Greeks, and only Greeks, can do! To make a cute point: only the Greek government can stop the payment of pensions to dead people so that less money needs to be taken away from the living; only the Greek government can arrange that the budget deficit is not reduced by silly austerity measures like taking more money away from those who have always contributed anyway but, instead, by taking it from those who have never contributed a dime.

Above all: where is the Greek brainpower (the academia, the media, the opinion leaders, etc.) suggesting economic plans and strategies how the Greek economy can recover? I haven’t seen a thing on that.

Earlier this year, through a course at the Aristotle University of Thessaloniki, I got to know a lot of Greek students and the young generation in general. They were not interested in Eurobonds and the likes of it. Their theme was: “We know our country is in trouble; we would like to contribute for the betterment of our country but somebody needs to show us how we can contribute”. That’s the spirit! And the drama is that no one in the Greek intelligentsia seems to find time to answer the young generation that simple question (because everybody seems so busy solving other people’s problems).

Let me try to put it as respectfully as possible: stop worrying about other people’s problems and start working on your own! Stop marketing your intelligence to the world and begin employing it for the benefit of your own country! Some time ago, an 11-year old sent a letter to Mr. Papandreou proposing his (very cute) plan how to solve Greece’s problems (published in the Ekathimerini). Don’t leave Greece’s future up to 11-year old's!

Warren Buffett's simple wisdoms...

Warren Buffett once described the role of current account surpluses/deficits in his wonderfully simple way. Think of Germany when you read 'Thriftville' and think of Greece when you read 'Squanderville". Here it is.

"Take a wildly fanciful trip with me to two isolated, side-by-side islands of equal size, Squanderville and Thriftville. Land is the only capital asset on these islands, and their communities are primitive, needing only food and producing only food. Working eight hours a day, in fact, each inhabitant can produce enough food to sustain himself or herself. And for a long time that's how things go along. On each island everybody works the prescribed eight hours a day, which means that each society is self-sufficient.

Eventually, though, the industrious citizens of Thriftville decide to do some serious saving and investing, and they start to work 16 hours a day. In this mode they continue to live off the food they produce in eight hours of work but begin exporting an equal amount to their one and only trading outlet, Squanderville.

The citizens of Squanderville are ecstatic about this turn of events, since they can now live their lives free from toil but eat as well as ever. Oh, yes, there's a quid pro quo -- but to the Squanders, it seems harmless: All that the Thrifts want in exchange for their food is Squanderbonds (which are denominated, naturally, in Squanderbucks).

Over time Thriftville accumulates an enormous amount of these bonds, which at their core represent claim checks on the future output of Squanderville. A few pundits in Squanderville smell trouble coming. They foresee that for the Squanders both to eat and to pay off -- or simply service -- the debt they're piling up will eventually require them to work more than eight hours a day. But the residents of Squanderville are in no mood to listen to such doomsaying.

Meanwhile, the citizens of Thriftville begin to get nervous. Just how good, they ask, are the IOUs of a shiftless island? So the Thrifts change strategy: Though they continue to hold some bonds, they sell most of them to Squanderville residents for Squanderbucks and use the proceeds to buy Squanderville land. And eventually the Thrifts own all of Squanderville.

At that point, the Squanders are forced to deal with an ugly equation: They must now not only return to working eight hours a day in order to eat -- they have nothing left to trade -- but must also work additional hours to service their debt and pay Thriftville rent on the land so imprudently sold. In effect, Squanderville has been colonized by purchase rather than conquest.

It can be argued, of course, that the present value of the future production that Squanderville must forever ship to Thriftville only equates to the production Thriftville initially gave up and that therefore both have received a fair deal. But since one generation of Squanders gets the free ride and future generations pay in perpetuity for it, there are -- in economist talk -- some pretty dramatic "intergenerational inequities."

Let's think of it in terms of a family: Imagine that I, Warren Buffett, can get the suppliers of all that I consume in my lifetime to take Buffett family IOUs that are payable, in goods and services and with interest added, by my descendants. This scenario may be viewed as effecting an even trade between the Buffett family unit and its creditors. But the generations of Buffetts following me are not likely to applaud the deal (and, heaven forbid, may even attempt to welsh on it).

Think again about those islands: Sooner or later the Squanderville government, facing ever greater payments to service debt, would decide to embrace highly inflationary policies -- that is, issue more Squanderbucks to dilute the value of each. After all, the government would reason, those irritating Squanderbonds are simply claims on specific numbers of Squanderbucks, not on bucks of specific value. In short, making Squanderbucks less valuable would ease the island's fiscal pain.

That prospect is why I, were I a resident of Thriftville, would opt for direct ownership of Squanderville land rather than bonds of the island's government. Most governments find it much harder morally to seize foreign-owned property than they do to dilute the purchasing power of claim checks foreigners hold. Theft by stealth is preferred to theft by force". 

Warren Buffett told this tale having the USA in mind. The corresponding formular would be:

Greece = USA²

Appeal to Greek brainpower!

This is an attempt to motivate Greek brainpower to apply their resources for the good of their country. Start with the following consultants’ slogan:

 

“The most expensive work performed in a company (country) is work which is performed flawlessly and perfectly but which is essentially superfluous”.

Or, if you are religious, think of the Serenity Prayer:

“Lord grant me the serenity to accept the things I cannot change, the courage to change the things I can, and the wisdom to know the difference.”

What is presently happening?

Greek brainpower (professors, economists, journalists, etc.) is very impressive but is seems exclusively focused on Europe’s debt problem. Proposals offered by Greek brainpower seem even better than much of what EU-elites have come up with so far (see Prof. Varoufakis’ Modest Proposal).

Unfortunately, Greece’s possibilities to influence the outcome of the European debt problem are practically nil. If a borrowing country wants to influence how its foreign debt is handled, it needs to do that from the start. Greece, instead, put herself from the start into the arms of the EU (instead of negotiating directly with creditors). Once that initiative is given away, it cannot be taken back.

So you have all the perfect and flawless Greek brainpower dedicated to things which Greece can no longer change. Put differently, a classic superfluous activity.

What should be happening?

Greek brainpower (professors, economists, journalists) should primarily be applied towards figuring out ways what Greece and Greeks themselves can do on their own to get out of the present dire straits. The discussion should not be about issues like Eurobonds. The discussion should be about ways how to jumpstart domestic economic activity.

What, now, is the appeal to Greek brainpower?

Come up with proposals and action plans what Greeks can/should do in order to return to a positive future perspective. There should be no limits on creativity. Below are some proposals which may be good or not, but at least they are proposals.

1. Develop plans to reduce imports and to substitute them as much as possible with new domestic production (even if this entails some temporary protection of “infant industries”. The EU will have to agree to this!).
2. Start with the substitution of consumption import products which could easily also be produced in Greece.
3. Develop plans for attracting private foreign investment to Greece, perhaps by formulating a new Investment Law which you ask the EU to guarantee. The Investment Law must assure the foreign investors the same security which they have, say, in Switzerland but better return potential than in Switzerland.
4. Develop plans for how foreign investors can achieve attractive returns on their investment in Greece. They will require an internationally competitive business framework for their operations.
5. Propose how official capital flight via bank accounts can be stopped (even if this entails capital controls. The EU will have to agree to this).
6. Take, for one, the McKinsey Report which proposes how 500.000 new jobs can be created in Greece in the next 10 years (and 50 BN EUR new GDP). Analyze what part of it makes sense and, possibly, what part doesn’t. Prod decision-makers to implement the recommendations.
7. Take the 1^st Report of the EU Task Force and comment on what part of it makes sense and, possibly, what part doesn’t. Work with the EU Task Force to implement the recommendations.
8. Finally, communicate as much as possible with the public about this so that Greeks understand that there can be light at the end of the tunnel --- if only one goes for it!

And if you now want to read further, please do, but it is not necessary. The text below only highlights the most important issues in greater detail.

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Greece is being forced to give up her sovereignty!

This is not true! Instead, over 10 years ago, Greece and 16 other European countries decided to give up a very important part of their sovereignty by giving up the right to print their own money. When one gives up the right to print one’s own money, one becomes dependent on those who print it.

Common sense and cash flows

I am not an economist but I do have common sense and I know something about cash flows. These 2 ingredients are always a good start when trying to solve financial problems.

Follow the cash!

First, to all those who want Greece to repudiate her foreign debt and to stop paying interest; to return to the drachma and to lead a good life in their own country within their own means --- before you do that, please figure out how you get, at minimum, 10 BN EUR cash from abroad annually because that is the minimum current account deficit even when not paying any interest abroad.

What is the “current account”?

The current account shows the cash flow from all external transactions of a country out of its ordinary course of business (not including financial capital transactions like borrowing/repaying debt, investment, etc.). Put differently: the current account shows how much a country earns abroad and how much it spends abroad (exports, tourism, etc. are earnings from abroad; imports, interest, etc. are expenses abroad). From 2001-10, Greece spent 199 BN EUR more abroad than she earned abroad. Take out the interest and you are still talking about 10 BN EUR annually, at least.

Greece has (and must have!) a structural current account deficit!

If an economy wants to increase the standard of living of the people, it needs to grow. In order to grow, the economy needs cash for investment. If no cash from abroad should be used, then economic growth (i. e. the growth of the standard of living) depends on the generation of domestic savings. As a still developing economy, Greece generates domestic savings at a rate which would not allow for significant growth (in fact, in the last 2 years the savings rate was enormously negative due to capital flight). 

So Greece needs “the savings of other countries” in order to grow and to increase her standard of living. This is a perfectly normal situation for an economy in development!

What are the savings of other countries needed for? They are needed to finance investment, imports and, regrettably in Greece, the budget deficit. Since the Euro, the savings of other countries were used almost exclusively for imports (above all consumption imports) and the budget deficit. Only insignificant amounts were used for investment.

How do the savings of other countries enter Greece? They enter as payments for exports, revenues from tourism and other services provided to foreigners; as loans; as grants (such as EU-grants); as remittances from Greeks working abroad; or as foreign investment. Since the Euro, cash inflows from exports, services, grants, remittances and foreign investment covered only little over half of what was required for payments abroad. The large difference came in the form of debt.

The role of debt

Debt, be it foreign or domestic, is not bad per se. It all depends what it is used for. If it is used for investment projects which will generate the revenue needed to repay the debt, debt is a wonderful accelerator of economic growth. If it is spent on consumption, the pleasure of consuming passes by but the debt remains. Greece’s debt was heavily used for consumption.

Why does Greece import so much?

The short answer is: because Greece has no oil and doesn’t build cars. The longer answer would be: because Greece buys a lot of consumption products abroad (where they are cheaper) instead of producing them “at home”. And the even longer answer would be: because Greece buys a lot of products abroad which she doesn’t really need.

What are imports?

Goods have to be produced somewhere. Imported goods are produced outside Greece. Wherever they are produced, that is where the production jobs are; the employees’ income and income taxes and the employers’ corporate taxes. Imports of goods which could just as well be produced “at home” are exports of jobs. There are goods which definitely cannot be produced in Greece (and must be imported) but there are many other goods which could just as well be produced in Greece (and should be!).

Example: every time some Greeks buy luxury cars, they increase the foreign debt of all Greeks for the benefit of their own luxury. It would only be fair to require them to pay special taxes on such imports.

Why does toothpaste need to be imported from Brazil? All one needs for the production of toothpaste are the necessary machines and ingredients. Should Greece not have those machines/ingredients and should she not be able to import those, then she should look for products which could be produced within present Greek resources (extreme case in point: olive oil! In 2010 Greece imported even some olive oil!).

Simple algebra for simple solutions

Greece must reduce her dependence on savings of other countries because other countries no longer want to send Greece their savings as easily as they did in the last 10 years. Simple algebra allows only 2 alternatives: (1) reduce the need for foreign savings by reducing the gap between cash spent and earned abroad; and (2) get the savings of other countries which you still need in a way so that you don’t need to repay them.

Regarding point (1): gaps can only be reduced either by reducing cash outlays abroad; by increasing cash revenues from abroad; or (3) through a combination of the two.

Regarding point (2): the only foreign savings which do not need to be repaid abroad are grants from abroad, remittances from Greeks working abroad and foreign investment.

Quick tactical growth vs. sustained long-term growth

Sustained long-term growth requires long-term planning: identification of competitive advantages; development of new industry areas and business lines; etc. That is, of course, necessary for Greece but it takes time. Greece needs to, parallel to the above, achieve some quick economic growth.

Quick economic growth is achieved by stealing market share. Greece has to steal market share from those who presently produce products abroad and sell them to Greece. Greece has to steal their market share by producing the very same products on her own and “at home”. To achieve that, some “infant-industry-protection” may be necessary (special taxes on imports ranging from 0% on necessary imports to 100% on luxury imports. The EU will have to approve that!).

The risk of “infant-industry-protection” is that it might be misused by clever entrepreneurs. That, however, can be – and must be! – managed!

Finance growth with private capital and not with debt!

Both, Greece’s public and private sectors already have more foreign debt than they can handle. Thus, it is of utmost priority that the new savings of other countries which Greece will continue to need come primarily in the form of private capital (foreign investment). 

Private capital does not move by mandate; it moves by incentives. If the right incentives are offered, private capital moves very quickly.

Greece should implement a new Investment Law particularly aimed at foreign investment. It should offer foreign investors the kind of security and internationally competitive business framework which will incentivate foreign capital to move to Greece. Since foreign investors are unlikely to have confidence in Greek laws at present, Greece should request the EU to guarantee compliance with that law.

New investment and exports

It would, of course, be ideal if new investment would also stimulate export growth. That, however, cannot happen overnight in a significant way because foreigners will not buy Greek products only because they are cheap. To build up export cultures and structures is necessary but, again, it requires time.

Under no circumstances should Greece become an “elongated workbench” for foreign multinationals because multinationals tend to come and go. What Greece needs is sustained growth and development.

Stop official capital flight via bank accounts!

As pointed out, the challenge for Greece is to attract the savings of other countries for her own growth. Against this background, it is absolutely unacceptable that the savings of Greeks could – completely legally – be transferred to bank accounts abroad. Capital controls will have to stop that (and the EU will have to approve that).

Accept advice from others!

McKinsey, for one, has prepared a report showing how 500.000 new jobs (and 50 BN EUR new GDP) could be created in Greece over the next 10 years. That should be one basis for preparing a longer-term development plan!

The EU Task Force has issued its 1^st Report full of recommendations how to improve efficiencies in Greece’s public sector and in the economy. That should be an action plan which should be given full support!

Do good deeds but also talk about them!

Greeks, like most other people, are likely to make sacrifices if they only know that this serves a longer-term good for themselves and for their children. Communicate with the population! Explain to the population where you have been, where you are now and where you are planning to go, and why all of this makes sense and is for the better! Create ways how the population can feel that they can contribute! Trigger excitement and emotions! (“Ask not what your country can do for you. Ask what you can do for your country!”).

The crux of the matter: the young generation

Bear in mind that, if you do not succeed, a good portion of today’s well-educated young generation will not spend their adult life in Greece. Instead, other countries will be thankful to Greece for having educated that young generation so well. And the drain will not be limited to the young generation. The drain will encompass all those Greeks who can get those rewards for their skills and talents in other countries which they would prefer to get in Greece but which they cannot get here.

Humiliation of Greece?

This article shows part of the Greek problem: Greeks feel that others (mostly Germany) are out to humiliate Greece; some even use the expression "to kill Greece". And those who are a bit more skillful with manipulating techniques resort to the lost-lover sentiment of "Who cares for Greece?"

One knows such reactions from personal therapy: when in trouble, people put themselves in the victim's role and point the finger at others. After all, when you stretch out your hand, 4 fingers point at others. Why should one use the thumb which points at oneself?  

At the same time with this article, the German daily Handelsblatt published an article stating that about 530.000 Greeks work in about 600 jobs which, being considered “hardships” and “dangerous to health”, trigger special allowances and early retirement. Some of them may be qualified; most of them seem not to be. Unions object to eliminating these preferences for some over others. Greeks ask how they can take more care of themselves? Well, do away with this preferential treatment for some over other Greeks!

The tax-paying Greeks (salaried employees; pensioners) are being taken for a ride by “the others” and they now even have to carry much of the burden of austerity measures. Who should care for those Greeks who are being taken advantage of? Well, only the Greeks can!

The state of law seems to be collapsing. Assessed tax obligations of 60 billion EUR are unpaid. 165.000 court cases are pending. Who should care for a return to a state of law? Well, only the Greeks can!

One could go on and on with examples of how Greeks, and only Greeks, can (and should!) care better for their own country. One thing is certain: if Greeks cared more for Greece, the others would, too!

1st Report of the EU Task Force

It exceeds my imagination why there is no discussion of the 1st EU Task Force Report in the Greek public (and media/blogs, etc.). Instead, one is preoccupied with possible conspiracies on the part of foreigners (above all Germans) to intentionally drive Greece against the wall; on austerity measures many of which don’t make sense; on possible solutions to the Eurozone’s debt problem; etc.

Suppose your family were the owner of a large company which is in such dire straits that bankruptcy seems unavoidable, triggering the wiping out of the entire financial worth of the family and jeapordizing the future of the next generation. Suddenly, someone comes along and offers you a plan how the company can be turned around and returned to solid financial footings. At the same time, this “someone” offers you to provide the liquidity to survive the turn-around period financially.

Wouldn’t you tell that “someone” that you are prepared to do everything required of you only to make sure that your children will again have a good future?

The Greek family has about 11 million members. Their financial existence is presently in extreme jeopardy and the future of their children looks bleak. They may have to emigrate in order to make a living. Isn’t it high time that at least some members of this family start doing something about that? The Greek family has the unusual opportunity that someone is proposing them what they can do about their own future.

Really, isn’t it high time to do something about that? If you don’t think so, ask your children. They are likely to be thrilled when shown that they can contribute something to the family’s positive future!

Collapse of the Euro or of the EU?

Mr. Niall Ferguson writes in the Washington Post that a EU-collapse is more likely than a collapse of the Euro. I would tend to agree.

Given the mandate to argue that only one of the two, the Euro or the EU, should survive, I would find it easier to argue the survival of the Euro.

The Euro has brought a lot of benefits to all (including Greeks). It is a mistake to think that one can only be a successful member of the Eurozone if one becomes as productive as the Germans. Lower levels of productivity should result in lower standards of living. In Greece, it was the other way around: since the Euro, the standard of living has increased dramatically but the Euro was only the indirect cause of this.

The direct cause was the flow of foreign debt into the Greek economy: from 2001-2010, 283 billion EUR (net) flowed into the economy as debt from abroad. If that had happened during the last 10 years of the Drachma, the same disaster would have occurred. One may argue that this debt only flowed into Greece because of the Euro and because of Greece’s membership in the Eurozone but financing from the rest of the US does not flow into Alabama simply because Alabama is a Federal State of the US. Lenders pay attention to what Alabama does with those funds (and they didn’t pay attention to what Greece did with her foreign debt).

Devaluation is certainly the easiest mechanism to adjust to different productivity levels within one Common Market but it is not the only one! One should do a lot more thinking about alternative adjustment mechanisms before one throws the Euro out with the bathwater for the wrong reasons.

Now to the EU. If EU-elites continue to strive to turn all the different cultures into one norm, then the EU should be dissolved. The EUs unique selling proposition is that it can house many different cultures under one roof. Conformity does not work with light bulbs; much less with people and cultures. If Brussels doesn’t know how to unite different cultures without destroying them, then they might want to read up on the Hapsburg Monarchy. The Hapsburgs managed to accomplish this for several centuries.

As regards Greece, the country must understand that there are Judeo-Christian values on which Europe rests (and ancient Greeks formed many of them). Total lack of solidarity within one society (as evidenced by tax-paying Greeks being taken for a ride by the other Greeks); the absence of a functioning state of law (165.000 pending law suits for unpaid taxes); extreme corruption as more or less a code of conduct --- all those are things which make a society unfit for Europe. If Greece doesn’t get a handle on those things soon (very soon!), she has no place in Europe.

Plädoyer für den Euro (aber nicht unbedingt für die EU)

Man scheint sich zwischenzeitlich überzeugt zu haben, dass die Einführung des Euro ein großer Fehler war (Stichwort: Gemeinschaftswährung ohne gemeinsame Fiskalpolitik). Diese Ansicht muss man nicht zwingenderweise teilen, nicht einmal dann, wenn man das heutige Chaos in Griechenland betrachtet.

Die Vorteile einer eigenen Landeswährung liegen auf der Hand: man kann sie drucken; je mehr man davon druckt, desto mehr wird sie abwerten; und je mehr sie abwertet, desto wettbewerbsfähiger wird man international. Bei diesen Überlegungen wird allerdings fast nie berücksichtigt, dass durch diesen Prozess auch die Finanzvermögen jener, die nicht clever genug sind, sich zu schützen, weniger wert werden (sei es durch Abwertung oder durch Inflation).

Man sollte aber nicht glauben, dass eine Landeswährung der einzige Mechanismus ist, um Ungleichgewichte zwischen ungleich produktiven Wirtschaftsräumen zu vermeiden. Letztendlich ist eine Landeswährung nur das Instrument, diese Ungleichgewichte auszuschalten. Am Ende des Tages ist es der ungleiche Lebensstandard, der Produktivitätsunterschiede ausgleichen sollte.

„Ausgleichen sollte“, weil er es in der Eurozone – am Beispiel Griechenlands bestens zu beobachten – nicht getan hat: Griechenlands Lebensstandard ist trotz niedrigerer Produktivität enorm gestiegen. Das lag allerdings nicht primär am Euro!

In einer perfekten Marktwirtschaft ist der Finanzsektor der optimale „Allocator“ von finanziellen Ressourcen: Banken sehen ihre Rolle in der Transformation von Risken/Fristen, die der einzelne Sparer in dieser kompetenten Form nicht machen könnte. Wenn Banken diese Rolle nicht erfüllen (oder sie falsch erfüllen), dann kommt es zu großen Ungleichgewichten und letztendlich zu Verlusten.

In der Theorie können Banken ihr Risiko ganz genau einschätzen und handeln gemäß dieser Einschätzung unter Einsatz der Vernunft. In der Praxis stellt sich das anders dar: je unüberschaubarer ein Kreditnehmer wird (nicht nur wegen seiner Größe, sondern auch wegen der Komplexität seines Geschäftes), desto weniger lässt sich sein Risiko von außen einschätzen. Beispiele gefällig? Kein Außenstehender kann heutzutage beurteilen, wie gut eine Großbank wirklich ist (mit Sicherheit nicht auf Basis ihrer Bilanzen). Eine Enron konnte innerhalb von Wochen vom Börsendarling zum Pleitefall abstürzen.

Gute Banker/Investoren reagieren auf diese Unsicherheit mit Hausverstand (Warren Buffett investiert nur in Unternehmen, deren Geschäft er zu verstehen glaubt und deren Managements er persönlich vertraut). Schlechte Banker/Investoren reagieren darauf mit Herdeninstinkt („wenn alle anderen Geld geben, dann muss es wohl ein gutes Risiko sein“).

Staaten als Kreditnehmer sind ein extrem schwieriger Fall für die Bonitätsanalyse, weil sie nichts produzieren und keine Umsätze haben. Staaten leben vom Steueraufkommen ihrer Bürger und von der verantwortungsvollen Verwendung derselben. Selbst wenn die Bürger eine schier unbegrenzte Bereitschaft und Fähigkeit hätten, dem Staat ihr Einkommen/Vermögen als Steuern abzuliefern, können es Staaten trotzdem schaffen, noch mehr Geld auszugeben. Wohlgemerkt: es sind die Staatsausgaben, die Steuern verursachen und nicht die Steuerpolitik!

Bei Staaten als Kreditnehmer kommt hinzu, dass das gesetzliche Regelwerk die Banken nahezu dazu verführt hat, auf die Umsicht eines ordentlichen Kaufmannes zu verzichten! Bei allen anderen Risiken waren Banken verpflichtet, Eigenkapital gemäß ihrer Risikoeinschätzung zu hinterlegen, nicht jedoch bei Staaten. Das gesetzliche Regelwerk hat unterstellt, dass Staaten risikofrei sind.

Bevor man sich also ganz überzeugt, dass der Euro als Gemeinschaftswährung ohne gemeinsame Fiskalpolitik nicht funktionieren kann, sollte man ganz genau die Gründe für die Fehlentwicklungen analysieren und sich überlegen, ob es nicht auch andere Instrumente gibt, Fehlentwicklungen zu vermeiden, ohne dass man gleich eine gemeinsame Fiskalpolitik machen muss (oder zur Landeswährung zurückkehren muss).

Der ordentliche Teil von Staatsausgaben wird in der Regel im Inland ausgegeben. Warum sollte man nicht eine Regel andenken, dass Staatsschulden für diesen Zweck nur im Inland aufgenommen werden dürfen? Das würde vielleicht besser funktionieren als jede gesetzliche Schuldenbremse. Außerordentliche Staatsausgaben (z. B. große Infrastrukturprojekte) können für den Kapitalmarkt des einzelnen Landes zu groß sein. Hierfür könnte man sehr wohl Auslandsschulden erlauben, allerdings jeweils in einer eigenen Projektgesellschaft (unter Haftung des Staates), damit die Transparenz gewährt bleibt.

Die Wirtschaft hat Ausgaben im Ausland (z. B. Importe) und deswegen muss die Wirtschaft in der Lage sein, sich im Ausland zu finanzieren. Hier wären die Kreditgeber auch in einer besseren Lage, die einzelnen Kreditrisiken zu beurteilen. Auch Banken sollten sich im Ausland finanzieren können, weil sie im Inland die Wirtschaft finanzieren. Wenn man allerdings beim Staat ein Maastricht-Signal setzt, dass sein Defizit nicht 3% überschreiten darf, dann müsste man Ähnliches bei der Wirtschaft tun. Man könnte z. B. sagen: „wenn das Leistungsbilanzdefizit 3% übersteigt, dann kommen wir in die Rote Zone und müssen die Entwicklung ganz genau hinterfragen (selbst wenn die Banken unseren eigenen Banken und Firmen weiterhin viel Geld leihen würden)“.

Der Euro hat für Bürger und Unternehmen sehr, sehr viele Vorteile gebracht (auch in Griechenland!). Man sollte deswegen nicht jetzt – mitten in einer Krise, die man zur Gänze dem Euro in die Schuhe schiebt – das Kind gleich mit dem Bad ausschütten und auf den Euro verzichten wollen.

Anders verhält es sich jedoch mit der EU als politischer Gemeinschaft. „Was nicht zusammen passt, soll man auch nicht zusammen zwingen“ lautet die herkömmliche Weisheit. Wenn unterschiedliche Kulturen innerhalb Europas nicht zusammen passen, dann sollte man sie getrennt lassen.

Das könnte aber auch der größte Fehlschluss der Geschichte werden. Eine Gemeinschaft bedeutet nicht zwingendermaßen Gleichschaltung der Kulturen. Man kann in Deutschland nicht einmal Bayern mit Hanseaten kulturell zur Gänze gleichschalten. Wie sollte dies dann zwischen Griechenland und Finnland möglich sein?

Die EU tut sich schon schwer, die Gleichschaltung bei Glühbirnen zu erreichen. Bei unterschiedlichen Kulturen wird sie das nie schaffen und man sollte dankbar dafür sein.

Die Stärke Europas liegt in der Vielfalt seiner Kulturen. Wie man diese Vielfalt unter ein gemeinsames Dach bekommt, ohne sie dabei zu zerstören, ist die eigentliche Herausforderung. Vielleicht sollte man sich in Brüssel einmal mit der Habsburg-Monarchie beschäftigen, die das ein paar Jahrhunderte lang geschafft hat. Möglicherweise könnte man davon lernen.

Eine politische Gemeinschaft braucht jedoch gewisse vergemeinschaftlichte Wertestrukturen, vor allem, was gewisse Grundwerte einer Gesellschaft betrifft. Österreich wurde einmal verurteilt, weil eine gewisse Regierungskoalition angeblich europäische Grundwerte verletzte. Darüber könnte man endlos diskutieren.

Es kann aber keine Diskussion darüber geben, dass Solidarität ein Grundwert jeder Gemeinschaft sein muss. Ohne Solidarität kann keine Gemeinschaft existieren!

Jetzt wird im Zuge der Eurokrise von allen Seiten die europäische Solidarität ins Feld geführt und damit wird – leider – das Prinzip der Solidarität falsch verstanden.

Solidarität ist ein sogenannter „bottom-up“ Prozess: wenn es sie „unten“ in der Gemeinschaft nicht gibt, dann kann es sie „oben“ schon gar nicht geben. Man kann gelebte Solidarität nur unter jenen EU-Mitgliedsstaaten erwarten, die auch im eigenen Staat Solidarität kennen und leben. Wenn in Deutschland 3 Bundesländer über den Finanzausgleich die anderen 13 Bundesländer finanzieren, ohne dass es eine Revolution gibt, dann ist das gelebte Solidarität. Wenn in Österreich 8 Bundesländer das Bundesland Kärnten retten, ohne dass es eine Revolution gibt, dann ist das auch eine Art von Solidarität.

In der griechischen Gesellschaft ist Solidarität bestenfalls beim Gewinn einer Fußballeuropameisterschaft erkennbar. Ansonsten werden griechische Steuerzahler von Nicht-Steuerzahlern ohne mit der Wimper zu zucken über den Tisch gezogen. Parteien haben jahrzehntelang die Gemeinschaft so sehr zum eigenen Nutzen über den Tisch gezogen, dass selbst die Hochblüte des österreichischen Proporzes noch Paradebeispiel für eine zivilisierte Gesellschaft wäre. Selbst die Kirchen schrecken nicht davor zurück: ein Athos-Kloster steht unter Anklage, mit einem zwielichtigen Immobiliendeal den Staat um rund 300 Millionen Euro über den Tisch gezogen zu haben.

Ein erheblicher Teil der griechischen Gesellschaft demonstriert am laufenden Band, dass er es noch nicht geschafft hat, der Vernunft Vorrang gegenüber Vorurteilen zu schenken. Ein erheblicher Teil dieser Wiege des Abendlandes schafft es nicht, die Werte seiner Philosophen zu leben und sich zu allererst einmal „selbst zu erkennen“. Stattdessen genießt man den Realitätsverlust und man lässt den Emotionen freien Lauf, den Finger immer auf andere zu zeigen.

Ohne einen funktionierenden Rechtsstaat kann man nicht mit gesellschaftlicher Solidarität rechnen. Der Rechtsstaat besteht jedoch nicht nur aus Gesetzen, sondern – und vor allem – aus einer gesellschaftlichen Kultur, die den Rechtsstaat respektiert. Würde man in Griechenland den Rechtsstaat mehr respektieren, dann gäbe es nicht – laut dem 1. Bericht der EU Task Force – unbezahlte Steuern in Höhe von 60 Mrd. EUR, davon 30 Mrd. EUR in 165.000, seit Jahren laufenden Steuerverfahren.

Mit diesen gesellschaftlichen Eigenschaften wird es schwierig, innerhalb einer großen europäischen „Schicksalsgemeinschaft“ mit der Solidarität anderer Länder zu rechnen. Das liegt aber weniger an der mangelnden Solidarität anderer, sondern an der eigenen Unfähigkeit, Solidarität zu zeigen.

Griechenland wird und soll natürlich in der EU bleiben, aber es muss anfangen, sich ernsthaft mit seinen gelebten gesellschaftlichen Werten auseinanderzusetzen und es muss eine Veränderung herbeiführen. Der 1. Bericht der EU Task Force ist ein eindrucksvolles Dokument. Wenn die EU dies erfolgreich umsetzt, dann darf man sich stolz fühlen, ein Europäer zu sein. Wenn Griechenland dabei mitmacht (was die Voraussetzung ist), dann darf Griechenland dankbar dafür sein, zur EU zu gehören. Und wenn beide erfolgreich zusammenarbeiten, dann besteht in der Tat die Chance für ein „neues Griechenland“ innerhalb von nur einer Generation!

Greece in the last 30 years

A very interesting article by Yanis Palaiologos, explaining how Greece became in the last 30 years what she is today.

Ancient Greeks and (not so) Ancient Germans

We owe Ancient Greeks the roots of democracy and the pillars of philosophy (“know thyself”, was one of the first things we learned in school about them). The sages of France and Germany, inspired by their Greek forefathers, gave the world Enlightenment which encouraged humans to “emerge from self-imposed immaturity, i. e. the inability to use one’s understanding without guidance from others”. Friedrich von Hayek suggested ways to leave the “road to serfdom” and Karl Popper reminded us of the importance of “liberty” and the “state of law”.

And what did we end up with in much of Europe?

We have tried to outlaw such basic economic truths like that there is no such thing as a free lunch; that the driving force behind the betterment of living standards is the reasonable competition of thought and performance. Instead, the illusion was created in people’s minds that sustained betterment of living standards comes about as the result of social legislation. The Welfare State which was originally intended to protect the weaker members of society has become an instrument to take care of entire societies. From grammar school onwards, we have learned that everyone owes us something: the parents, the teachers, the employer, the state, etc. but no one really reminded us that, in the first place, is it us who owe something to ourselves.

Germans have now for decades been able to take it for granted that the formula “less effort but more social benefits” can work forever. Their expertise with production and customers around the world have made this possible (plus the benefit of having a third party paying for her defence). Greeks, on the other hand, developed an expertise in living and banks from around Europe made this possible.

And now we are all in a mess. Yes, we are ALL in a mess, not only the Greeks. The Greeks are in a mess because they OWE debt which they can’t pay. The others are in a mess because they OWN debt which isn’t being paid. Only a small debtor needs to be nervous in front of his banker. A large debtor makes his banker nervous. Greeks are already feeling great pains of adjustment because they can no longer buy so much abroad. Just wait to see the pains which Germans will feel once they notice that they can no longer sell so much abroad. Exports mean to Germany employment. Should they break away in a larger way, unemployment will skyrocket in Germany.

It is, of course, a lot more comfortable to talk about “us all being in the same boat” when the others are suffering already and you are not yet suffering. But rest assured: the others will suffer, too, eventually (particularly if they were to leave the boat).

Some African tribe allegedly follows the motto “when in times of trouble, remember your ancestors and think of what advice they would give you”. What advice would German and Greek ancestors give today?

Well, maybe German philosophers would remind today’s Germans that “you can’t have the cake and eat it at the same time” and maybe Greek ancestors would tell today’s Greeks that “there is no such thing as a free lunch”. They would use better words but it is the message which counts.

Will we see "doomsday"?

It is utterly ridiculous to think that the rich Europe could not master this debt crisis out of her own resources if only she got her act together! Start from the worst-case-scenario: add up the debts of the PIIGS-countries; scratch this amount from memory and start all over again, this time with better policies and structures. So a few GDPs go down the drain. So what? If there were a European-wide war, a lot more would go down the drain and life would go on afterwards all the same (except that there would be physical destruction).

Go ahead: waste a few years of living standard with a purpose in mind but don’t waste the living standard and perspectives of a whole generation without any purpose in mind!

The 1^st Report of the EU Task Force for Greece, published today, outlines very well how Greece could become a “new and modern Greece” within less than a generation. It is clear that North/South production/consumption patterns require adjustments. If markets don’t accomplish that, then policies will have to. Don’t plan the economies and don’t let them hang loose; manage them in line with competitive advantages of each culture!

Greece: Current Account and Foreign Debt (2001-10)

in EUR billions

		2001	2008	2010	2001-10
Revenue from abroad
	Exports	12	20	17	146
	Services (e. g. tourism)	22	34	28	268
	Other income	2	6	4	34
	Current transfers	6	7	5	62
		----	----	----	----------
	Total revenue from abroad	42	66	54	510
Expenses abroad
	Imports	33	64	45	446
	Services (e. g. tourism)	13	17	15	131
	Other expense (e. g. interest)	4	16	12	96
	Current transfers	2	4	4	35
		----	----	----	----------
	Total expenses abroad	53	101	77	707
Net foreign deficit (current account)		-11	-35	-23	-197
Foreign debt
	Central Government	?	192	182
	Financial Sector	?	147	204
	Others	?	24	18
		----	----	----
	Total foreign debt	121	363	404

Some conclusions from these trend statistics 2001-10

1)      Total expenses abroad exceeded total revenues from abroad by 39%, leading to a net foreign deficit (current account) of 197 BN€.

2)      Put differently, Greece as a country spent 197 BN€ more abroad than it earned abroad.

3)      Had Greece financed this deficit with equity capital from abroad (e. g. foreign investments; remittances from Greeks living abroad; EU-grants; etc.), then Greece would not have a foreign debt problem today.

4)      Greece financed this deficit exclusively with foreign debt. In fact, foreign debt increased by 283 BN€ which means that foreign debt was also used to finance domestic activity (and some of that “domestic activity” consisted of transferring private money to foreign bank accounts).

5)      Unless Greece can sustain her ability to attract foreign debt, something else must happen in order for the books to balance: reduction of imports; increase of exports; increase of revenues from tourism; increase of foreign investment or EU-grants; or a combination of these factors.

6)      It must be noted that a reduction of imports translates into a reduction of the standard of living. So much more is it important to primarily operate with the other variables in the above combination.

7)      A return to the Drachme would quickly correct these imbalances: imports would become more expensive for Greeks and decline; exports would become cheaper for foreigners to buy and increase; vacations in Greece should become less expensive for foreigners and revenues from tourism should increase; foreign investment might increase if Greece becomes competitive from a financial cost standpoint (however, Greece would also have to become competitive from the standpoint of the ease of doing business in the country).

PS: a return to the Drachma would also wipe out a good portion of the value of the roughly 200 BN€ savings in Greek bank accounts and it would have an unpredictable impact on Greek banks and pension funds.

Letter to Mr. Nick Malkoutzis, Deputy Editor of the Ekathimerini

I had to go over this interview a couple of times to find some quotes which are so unbelievable that I thought I had misheard the first time around. Let me comment respectfully.

“Governments (like the Greek government) are now being forced to stack austerity on top of recession because the European banks are undercapitalized” --- I agree that fear on the part of EU/ECB-elites that something bad could happen to their banks prompted them to take some of the most incompetent policy decisions that were ever taken during sovereign debt crises. In the process, they transformed something which should have been the most natural thing in the world (an orderly rescheduling of Greece’s debt) into the risk of a financial Armageddon. For the mess which has been created in the last 2 years, the EU/ECB-elites are entirely responsible for.

But what does that have to do with austerity measures in Greece? On the contrary, Greece should be happy that the European banks were/are so weak! That way, Greece could turn her own problem into a European problem (with the active help from incompetent EU/ECB-elites). Suppose European banks had been strong as rocks. Strong banks would have said to Greece: “Look, we have already made more than enough loan loss provisions against your debt with us so we are indifferent which way you want to play it. We suggest that you get your act together and that we agree on an orderly debt rescheduling within 3 months. If you prefer to default, go ahead”.

Austerity measures became necessary for Greece because the government couldn’t pay its bills any longer because it no longer could get financing for that. Only weak banks (and weak EU/ECB elites) throw good money after bad in the hope that the problem will go away. Strong banks would have told Greece that they won’t offer new financing any longer; regardless!

To this date, the Greek government has not assumed ownership of its problems. By that, I mean coming up with their own proposals of how to get out of their mess. Instead, Greece has so far assumed the role of the willing executor of the will of foreign powers. As Bill Rhodes would tell you, the most important thing in a sovereign debt crisis is that the government of the debtor country needs to take charge (or at least leave the impression that it is taking charge). Otherwise, it will never get the support of the people behind them. Here is an interview with Bill Rhodes. What could/should the Greek government have done in order to keep the appearance of being in the driver’s seat?

First, the government should have said “we are not going to reduce overall government expenditures at this time because that would only be oil in the fire of a shrinking economy. However, we will restructure government expenditures because right now they are very unevenly and unfairly distributed. Why will we not reduce overall government expenditures? Because we really don’t have a problem with overall expenditures: they were 49,5% of (a shrinking) GDP in 2010 compared with 53,0% in Austria and 56,2% in France. So we are far from being out of whack.

Secondly, we will reduce the budget deficit by increasing our revenues because it is our revenues which are out of whack: 39,1% of GDP in 2010 compared with 48,3% in Austria and 49,2% in France. That reduction will only come as little as possible from the “usual suspects”, that is salaried employees and pensioners because they have always been carrying their fair share of contribution to society anyway. We will get those revenues primarily from “the others”. That we can’t do on our own because we lack the administrative apparatus and controls, which is why we will ask for the help of an EU Task Force. That EU Task Force will have our unequivocal support (and they will get the applause of the Greeks who are already paying taxes).

Thirdly, we will get more tax revenues from the economy because we have worked out an economic development plan based on investment, primarily foreign investments, which will quickly stimulate economic activity. (This is where this plan would have to be described except that, to this date, I have not seen the shadow of such a plan being in the workings). Here is the link to a plan which I would propose, but there are probably many better ideas.

Fourthly, we will request our present creditors to form a Steering Committee with which we can negotiate the rescheduling of our debt and we ask EU/ECB-elites to work “behind the scenes” that those creditors do that and negotiate in good faith. The following will be the principals underlying our negotiations:

1)      We will honor our debt to the last Eurocent; no haircut!

2)      We will agree to any rescheduling which is structured in such a way that cash interest paid by us does not exceed 10% of our total government expenditures for the next 10 years. Interest going above that cap must be capitalized.

3)      We offer to prepay 50% of our debt with a new 30-year bond with interest payable on maturity.

4)      We offer to prepay the other 50% of our debt with new bonds with maturities between 10-20 years and interest above the above mentioned cap capitalized.

5)      We request Fresh Money for the financing of our budget deficit (and only for that purpose!) from the EU rescue packages (not from existing lenders).

6)      We request the existing lenders to our banking system to hold their trade credit lines open at the present level. Should we need more trade credit lines, we will request the support of the EU rescue package.

So much for “fourthly”.

Fifthly, we request that funding under the Structural Fund and EIB-facilities (without the co-financing requirement) are rapidly made available for infra-structure projects which we submit. (At this point, there would be a listing of such projects; a new Formula-1 race track would not be among them!).

Finally, we request the formation of an EU Advisory Task Force which can assist us in each and every way to get our country’s public administration and economy in shape.

“Germany has held down the Euro so that she could export more” --- Come again? The Euro has appreciated (not declined) against the USD roughly 40% since the UDSs peak in the mid-1990s. I grant you that the DM would have appreciated much more than the Euro has and German banks would have had less surplus to lend to Greece. But then the Greek consumption-driven and debt-financed standard of living since the Euro could also not have occurred.

Final comment

It gets a little tiresome for a non-Greek observer to see how Greeks use all their brainpower trying to solve a problem which is not theirs: the solution of the European debt crisis. Except for a Report of the Athens McKinsey office which recommended how 500.000 new jobs could be created over the next 10 years (and 50 billion EUR more in GDP), I have to date not seen a single initiative out of Greece how Greeks could handle their own problem. This link details my position.