They should have defaulted on the debt they owed to the private sector banks but instead EU/IMF etc. convinced them to borrow money from them to pay off the banks.
I hope that was supposed to be marches and it auto-corrected
Maybe you can have both?
I think they are ruining the Euro project because they are creating a lot of animosity between peoples. Greece will survive but it will be remembered for a long time that in their worst crisis they were being bullied by their bigger brothers. Right or wrong, that's how it is seen.
Politically?
Even if ignoring the EU side of it (which is nontrivial for various reasons not limited to defense, the vision of the EU, etc), is there a magic wand that would make the Greek government not be populist and wasteful with their own currency?
The problem with this is that Europe is not united. We have different languages, culture and histories. This is also what make Europe a beautiful, culturally rich place. The political elites are trying to impose a one size fits all model across Europe which won't work because we are not really all that united.
We don't have a common European demos that means that individual countries are fighting for their own interest and their is no overall strategy for Europe because the electorate doesn't really care about Europe, just what they get from being a part of it.
We really need to go back to being a trading block and to remove all of the political dictact and interference. If we really must have political unions, then they need to be between countries that share a common language so that the people can challenge their political masters collectively. This would mean Britian and Ireland, Germany and Austria, France and Belgium.
Euro as a common currency makes travel super convenient for example, not to mention the Schengen area and open borders.
Same could be said for certain regulations in health and sanitation for example, knowing you could rely on some forms of standards existing (however poorly implemented or not).
Also why would you make artificial barriers based on language, shouldn't the lines be formed based on culture and common understanding instead? Language is not what is preventing common people from participating in politics.
Language is preventing me from watching Austrian TV and phoning into their radio debates. That is, the population of Europe is silo'd whilst their political masters are attempting to work together. This is fractured because the electorate that place these politicians into positions of power cannot unite together to challenge them.
If there was a political union between the UK and Ireland then language wouldn't prevent me from calling an RTE show. We even already have a political party operating both in Westminster and Dublin - Sinn Féin.
Perhaps the various recommendations made in the late 80s and early 90s would be useful to reconsider. Hayek, for example, often suggested that the EEC could make every member nation's currency legal tender in all the others, to create a free market of currencies. He was a big fan of denationalising currencies anyway, and of having currencies compete against each other.
Another proposal on the table for many years was the idea of launching the Euro as a parallel currency to every nation's own currency. So, you could still pay your restaurant bills accross Europe with a single currency if you wanted to, but nations would still be able to fluctuate against it in case of trade surplus or deficit, the very thing that has been putting so much stress on the Euro's frequent deficit members (i.e. Greece, Portugal and Spain), and stress on the Euro itself.
Dude may be a great economist, but he clearly has no idea about ergonomics.
Like what, every store has to have twenty different cash drawers? This idea is _spectacularly_ poorly thought out.
This might seem sensible to many in Northern Europe, but I imagine that in the Mediterranean this is almost an attack on their culture. If countries like Britain and Germany want higher hygiene levels on the olive oil served in their restaurants then they can do that themselves but they shouldn't be imposing that onto Spain and Italy.
Part of the excitement on travelling to other countries is the differences; the longer the EU goes on with it's powertrip the more homogenised we will become.
Sometimes things go too far and then it's time to back off, but at the same time knowing that there's a good chance obviously dangerous things are banned is a good thing.
Or does anybody believe France or Italy will accept cut downs like Greek or being treated like them.
Italy is having their own EU vs Greece moment internally with North vs South.
With the devalued drachma restored, the tourist sector will boom, and their exports will improve drastically. Subsequently their GDP will rise and they'll be in a better position to make repayments to its creditors. Without exposing further risk to surrounding Med member states who are not much stronger at the moment.
Individuals should convert their euro's into bitcoins or other, more stable, flexible assets to use whilst this happens and until the Drachma stabilises.
At this point either path will be a long and difficult one, but I think there's light at the end of the #Grexit path.
The main thing is that you can't tax by printing currency anymore which is a really easy way to levy taxes. That means you have to have an efficient taxation apparatus, tax the rich and poor equitably and be very careful with borrowing.
Greek's problem is that it isn't particularly strong in any of those and thus isn't really suited for being part of the Eurozone yet.
This I think is the main difference with the USA. The USA also has richer and poorer stats, but because of the shared language, history and culture, people in both the richer and the poorer states feel like a US citizen.
They just exercise some creativity by making sure they don't meet the requirements.
> The terms of the deal for Greece have been pretty onerous, you lose control of your currency with no equivalent upside.
No upside? What do you call a decade of easy access to super cheap credit? Also, these terms are not unique to Greece, no other Euro-zone country has control over it's currency.
A poison pill. It's like giving free booze to an alcoholic. It's certainly not kindness.
as the latter: Greece benefitted quite a bit from EU subsidies since joining. you can argue about if the same holds true for joining the eurozone.
Besides, without trust in the new currency it won't be worth anything. That trust has to come from the backing of a foreign institution.
A new full blown currency, yes. A new temporary currency can be done in days, or weeks at most - East Germany did it. Slovakia did it. The process involves your current currency and a stamp.
For businesses and institutions, it's much easier, everything is electronic anyway. Your bank accounts just switch over from EUR to XGD.
> it won't be worth anything
That's pretty much the point. Exports and tourism will be boosted and the debt will be re-denominated in the new currency (at a fraction of its EUR value) or outright defaulted on.
My "at least a year" claim is based on this:
http://www.theguardian.com/commentisfree/2015/jul/10/germany...
> My "at least a year" claim is based on this:
Now, why would a politician exaggerate how painful a solution he doesn't like is? Does he really think that post-grexit Greece and Iraq in 2003 are completely comparable in terms of security and infrastructure? Does he know that Iraq's economy was almost entirely cash-based whereas Greece's is based on a fairly modern banking system?
I base my claim on actual history that actually happened: http://uk.reuters.com/article/2011/12/08/uk-eurozone-lessons...
If I put on my conspiracy cap, I wouldn't be surprised if a helpful soul decided to discreetly have a transition-currency printed up, ready-packed on pallets in a basement somewhere in Frankfurt.
I also agree that your skepticism is justified. However, you're mistaken that Varoufakis wrote that because he doesn't want an exit. In fact he's been arguing that Greece should have started preparations for a new currency years ago. Varoufakis even got fired because Tsipras wasn't willing to gamble with a possible grexit. Of course it's possible that Syriza did make preparations for the new Drachma and all claims to the contrary are just misdirection. I don't believe that, though.
Central Bank of Russia. That's its self descriptive name.
Now that I've pointed out there are more than binary alternatives WRT euro or drachma, I'm not about to start claiming this 3rd alternative is the only other possible alternative. But it sure is a good idea!
From the Greek perspective they're "all equal under the law" in theory but in practice they're gonna be debt slaves until they finally break completely free. There are alternative short term plans but NO alternative long term plans. Better sooner than later. What I mean is something like revolution now and be back to normal in 2020, or five years of grinding poverty (if they're lucky enough to have it that good) followed by revolution in 2020 and back to normal in 2025. The Russians are big enough to take care of greek issues, are somewhat more financially competent than the greeks, and are reasonably nearby.
From the Russian perspective this would be a "cheap" way to gain a friendly client state in Europe. Aid business is corrupt as heck so some fraction of the "aid" would just get recycled into Russian arms industries, like every other foreign aid package. Russia has natgas and resources in general. Greece has ports and Russia always likes ports... Greece has land that would hold a Russian military base or airfield or naval base.
As a Dutch citizen, I'm not particularly proud of the way my government (and Germany, etc.) handled this. Silver lining is that it includes a 12.5b investment in the Greek economy, if invested well will boost economic recovery.
I ask myself, would Greece be able to improve government spending and reduce corruption without this pain?
I think Tsipras was naive: he probably hoped Germany would be lenient because the alternative was so unthinkable.
In theory it's great to force a country to make productive reforms that politicians would otherwise refuse. In practice, the reforms demanded here are largely punitive and pointless.
The focus on corruption is a cheap way to claim to moral high ground, and to justify antidemocratic "parental oversight". If Greece allowed the equivalent of A Dutch Sandwich tax arrangement it would be called fraud and corruption. But when the Dutch do this it's somehow OK. Clamping down on corruption in Greece would certainly be a good thing, but the hysteria about corruption in the media is absurd.