Thursday, January 22, 2015

A Precise Prescription for Greece

A reader by the name of William Hunt posted the following commentary to this WSJ article:

Prescription for Greece -

1. Default on its debt
2. Leave the Euro zone
3. Recover on their own with no access to international financial markets

This has occurred all through history, so it is not anything new.  Projected recovery time - 5-10 years. Get on with it.

Well, it certainly is a crystal clear and concise prescription!


  1. I share his opinion, but not his optimism for recovery. That however, is not how it will play out in the near future. Instead we shall have the usual High Noon Game, it goes like this.
    Greece: We want more money and a promise that, never mind what we do, our place in the EURO is sure. We will then balance our budget and carry out reforms. If you don't give us that we will explode Europe.
    Europe: You must prove to us that your budget is balanced and the reforms carried out, we will then consider if you need more money. We will never give you a guaranteed place in the EURO, we have been burned before, it will always depend on your behavior. You will have to start the explosion in Greece; we shall then see how far it will reach.

  2. That prescription is not only "crystal clear and concise", but the only efficient way I can see.

    A few years ago I was convinced that austerity with "internal devaluation" could help, but we all have seen that it did not work.

    We now have an interesting parallel in the Swiss economy: The divorce of Swiss money from the Euro has placed the Swiss industry in a very uncomfortable position and already discussions started, if workers here should/could agree to a moderate reduction of their salary...


  3. @ Lennard....

    It won't get that Far Lennard. Everybody is in the uproar of preelection and as Greece we have managed to pull in the global community into this rhetoric. Everybody is playing there game. No extremeties will come out of this whoever is in governement.


  4. A very interesting choice of comment. So many doctors, so many recipies. One of Tsipras' most successful slogans in the last days, is "remember that this time, the lenders don't vote".

  5. The early signs of Syriza governance are not good. Attica governor Rena Dourou reopened public-sector vehicle-inspection centers.

    Greece is moving backwards.

    1. What did you expect her to do? Now they say they want to make this Greece-wide. Back to 1981. Allergy to the word "private". On the other hand, in SYRIZA's electoral campaign, there are 300.000 new jobs. Given that they say they will abolish TAIPED, cancel all privatizations, restatalize what's been privatized, guess where the 300.000 posts will be... Did you see the POSPERT (ERT trade union) flags in Tsipras' speech? They will be the first to be hired back, since 80% were PASOK/SYRIZA anyway, with the righteous system of "those faithful shall be rewarded".

    2. While Mr. Kastner is more preoccupied about the debt, i would be more concerned exactly on how they will agree with Schauble on what "reform" is. Because the definition varies wildly. "Cut salaries and pensions". Reform for Schauble. Impoverishment for SYRIZA. Privatization? Reform for Scauble, Selling out the people's property for SYRIZA. "Elasticity of labour market". Reform for Schauble. Destruction of workers rights for SYRIZA.
      I would pay good money to have a chair in the same room, when Schauble will be all red in his face, trying to understand how the public sector is the lever of growth and how raising the salary to 751 euros is helping competitiveness, while the serene Mr. Stathakis, with his velvet voice, will be giving him ideological lectures against neoliberalism.
      Even if Tsipras does accept to turn around and he can have the former PASOKers follow him, the real problem will be his SYRIZA core politicians and how they will have to apply a policy that they loathe. And at the same time, resist the attacks from the left from KKE accusing them of becoming the new PASOK and from PASOK and ND on the right side, accusing them of coming to their steps.
      I always more think that Tsipras will find himself to a position, where referendum will be the least destructive choice for him. If he abbandons the left promices, he will disappoint all those who voted him for that. If he abbandons the center voters, he will have to clash with the EU and possibly default.

  6. With the current crop of politicians -and voters- step #3 is unlikely. The risk is that we become Argentina.

    I would rather have Merkel running the show.

  7. Tsipras has won, so now this prescription becomes increasingly likely.
    Let's hope for the best - Grexit in 2015! Yes, he can!

    1. According to the latest rumours, Prof. Varoufakis and not Dragasakis will be the new finance minister. Dragasakis instead, is rumoured to become vice president of the goverment. Not to disappoint you, but Prof. Varoufakis prefers a default within the euro.