6 myths of the Euro / Greek crisis
From the the Financial Times comes this opinion piece that says there are 6 false beliefs standing in the way of reaching a solution.
Here are the 6 in brief, the full article has more detail here: Mythology that blocks progress in Greece (the Financial Times is gated, but can be read with a free registration)
Myth 1: A Greek exit would help the eurozone.
If Greece leaves:
- If Greece suffered a calamitous aftermath, populist campaigns elsewhere would be less effective
- But euro membership would cease to be irrevocable
- Each crisis could trigger destabilising speculation
Myth 2: A Greek exit would help Greece:
- Many believe a weak new drachma offers a painless path to prosperity, but Greece cannot easily expand its production of internationally competitive goods and services
Myth 3: It is Greece's fault:
- Nobody was forced to lend to Greece
- Stupid lenders lose money
Myth 4: Greece has done nothing
- Greece has undergone a huge adjustment of its fiscal and external positions
- One of the tragedies of the impasse over the conditions for support is that the adjustment has happened
Myth 5: The Greeks will repay:
- Forgiveness is inevitable
Myth 6: Default entails a Greek exit:
- It might be possible to run the Greek economy with restricted functioning of its banks. The cash-starved Greek government might make payment with IOUs that it would accept in payment of obligations due to itself. While undesirable, this would be possible.