Quote:
Originally Posted by Damien
How is that going to help though if they have no willingness to reform their economy and society? They can default on their debt and adopt their own currency again but who is going to lend to a nation where the money goes down a black hole and who has recently defaulted on their debt?
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Oddly enough, Dan Hannan made a similar point in the Tele yesterday. Never thought thee and he would agree on much.
You are right; default, devaluation and money-printing is not a solution and in the long term it is damaging. The judgment call is whether it is more or less damaging than the alternatives. What it can do is buy time for reforms to be implemented. Unfortunately, as Hannan pointed out, the reforms necessary are the ones Greece has been undertaking as the conditions of its existing bail out, and which Syriza was elected specifically to undo.
As things are, with Greeks unwilling to reform their economy, default would not help. However, keeping them hooked on debt from the IMF or the other EZ states isn't helping either and the country is sinking further into the mire despite now running a modest primary surplus.
The only way they are going to get debt relief is to default. Then, it is to be hoped, they will realise that the means to balance the books are within their own grasp. They may be more willing to act sensibly at that point, or at the very least, the complications brought about by default and ejection from the Euro might keep them too busy to do anything very stupid.
On a related note, I see that clown Martin Schulz has popped up to say that if Greece leaves the Euro, it will also be kicked out of the EU. I suspect that somewhat batty assertion tells us more than Schulz intended about how likely an imminent Grexit now is.
With any luck, this whole debacle is going to necessitate a treaty adjustment which Cameron can hang his own renegotiation plans on.