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Old May 10th, 2010, 8:09 am
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Klio  Female.gif Klio is offline
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Re: Crisis in Greece, the Euro Area and the European Union

Let me make it clear that I have little knowledge of these econoic matters. I try to keep up, but it's very difficult to understand, IMHO. Thus, whatever I am saying in these areas amounts to no more than a hunch. However, I have spent quite some time in Greece, and I care about the country and also know a bit about it. I wish we had somebody Greek here to give us a inside view because I am not entirely up to date, but I'll try to chip in for the moment.


  1. Do you think Greece should be kicked out of the € area and left to sort out their problems themselves?

    I don't think that this is feasible. Even if you don't think about the weelbeing of the Greeks (and they clearly have brought a lot of this on themselves), I think it would just drag down the Eurozone even further.

  2. If yes, what do you think would happen before they get enough new Drakhmas out in circulation?

    I don't think that re-introducing the Drakhma is feasible. It would cost even more, it would upset the economy and so forth. I know that there are countries which use the Euro without being in the Eurozone (just a some countries outside the US use the Euro). I don't know how one would technically demote Greece from a Eurozone country to a country that merey has the Euro in circulation, but if this is technically possible it would work without too much disruption.

  3. Do you think they should be left to sort it out themselves but not kicked out?

    No. They have reached a point where they can't sort themselves out without help. If they are in the Eurozone, this needs sorting out for the sake of everybody else (as I said above, leaving might not even be an option possible without disrupting the whole zone too much). So, IMHO, that bailout was probably needed. It seems so bad that Spain, Portugal Italy and perhaps even Britain might be dragged into it. I think it's worth doing everything possible to avoid that. And yes, I think that's worth a good deal of money. The alternatives seem a lot worse.

  4. Do you think bailing them out is the right thing to do?

    It's not a nice option, but see my previous answer. I assume that it's the least worst option.

  5. If so, do you think 110 billion € is enough?

    No idea. I assume that somebody tried to work out how much is needed. I would guess that they stayed on the lowest possible end of the scale to avoid even more anger among European electorates. Thus, I assume that if anything, it might not be enough. But really, I am guessing, and what I just said doesn't mean that I *want* more money to be put in.

  6. What do you think will be the consequences of this crisis on a) The Euro area level, b) The European Union level, c) A global level?

    No idea. I think they'll have to do everything in their power to keep the damage to the Euro as small as possible. The UK also has to be worried, it seems, although, again, I don't quite know how this works (didn't we stay out of the Euro to avoid this sort of thing?).

    In the long run, I'd hope that this will lead to much stricter controls of how the countries in the Eurozone handle their debt. Quite a few of them broke the rules at some point or other (I think this even includes Germany).

  7. What do you think will be the consequences for the people of Greece? Widespread poverty? More riots and strikes? What else?

    It's pretty bad.
    I worry about Greek civil society.

    Tenshi says 'they should stop with the riots'

    Well, it's not so easy. I hear (and can't remember the source) that 70% of Greeks understand why this is necessary and are prepared to do their best to work through it. But Greek society has always had extreme elements (right wing, left wing and anarchist) which have never gone away since the awful civil war of the late 1940s and early 1950s and the dictatorship (Junta 1967-1974). I am not sure whether these elements can be kept in check. It really worries me. I have no idea what might happen if they can't keep the riots and the strikes under control.

    The Greeks in general, as a people, will come through this. They are hard-working and most of them still remember being a lot poorer than they are now. I have known Greece since 1990 and I have to say, it is amazing how it has changed. This is true for the standard of life, but also how the country is run. COrruption is still an issue, but (purely based on observation over the years) I would say that corruption has considerably decreased with each government.

    For example, I remember a time when the only trace of EU money for infrastructure where big signs promising building works (e.g. major road building). Then, in the late 90s, suddenly there were actual building sites to go with those signs! In recent years, Greece seemed a much better country to work in than Italy!

    So I hope they'll get through this - they have made immense progress. We know now that some of it was on loans they couldn't afford, and that's bad -- but really, in terms of the progress society made, the money isn't the whole story. But I can't but wish Greece well. I am angry about what they did (I remember being furious when it turned out that they had cheated in order to get into the Euro!!), but I know the country too well to want them to be left to fall back into developing country status.

  8. Do you think that Spain and Portugal will follow soon?

    We should do out best to avoid that.
    Incidentally, I am *really* worried about Italy. I really think that Italy is a big nice-looking facade with a HUGE mess (no longer well) hidden behind it. It will no longer be workable at some stage, especially as lomg as they have the kind of governance they have been enjoying for decades (Berluscoi is just a symptom of a bad system). Italy really is 'too big to fail', but I don't even want to think o what might hapen there.

    It's odd - I know both countries, Greece and Italy, and have worked in both - and I think I recognise the signs of a corrupt economy that is made to look bigger than it is (which, to an extent, is what brought Greece down in the end). I always thought that this seemed to be a lot worse in Italy. They are lucky to have the prosperous North to drag the hopeless South along with it, but the North is ailing, not least because of an arcane business ethos which should have been left in the 19th century. There are lots of houses of cards there waiting to collapse... does anybody remember what happened to Parmalat?

  9. Do you think that Greece will ever be able to repay the loans?

    Probably not. But I have great confidence in the Greek people's ability to scrape a lot from not very much (Greece is a resource-poor country), if they manage to keep corruption at government level under control. But at this stage we can only hope that in, say, ten years' time the country hasn't collapsed economically and has a working civil society with a democratic government. Everything is at stake if the economy can't recover at least moderately.


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Last edited by Klio; May 10th, 2010 at 8:20 am.
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