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Greece without Grexit

22/07/2015

Someone asked why i write negatively about Greece. My answer is I found intellectually annoying certain stand point, giving false support to the Greeks, and i will try to mention some of these claims and explain my opposition to it;
1. The Germans let the Greeks to enter the Eurozone with overvalued Drachma, to create market for its exports. By doing so they caused destruction of Greek economy, exactly as they have done it to Eastern Germany.

This is annoying non sense, enough to see the size of Greek market to understand it. But the other issue is, why would anyone sell to someone any merchandise, while knowing that the customer will never pay for it?

2. Germans should compensate the Greeks for the evil they caused to Greeks during WWII.

First of all the Greeks are not alone in this claim. If right morality would exist in this world, probably the whole world could have claim against the Germans. If i understand correctly only the Jews were compensated for German crimes against them. But what’s more important is that all the post WWII arrangements in Europe including the EU were based on non revanchist attitude, as contrary to the post WWI arrangement, which later became the main cause for the outbreak of WWII. But then Greece was compensated, while taking about 500 billion Euro loans, that will never be return. Truth, this money was not invested properly, but mostly stolen by the corrupt Greek politicians, but this is a Greek internal problem.

3. Greece should never enter the Eurozone.

Yes, this is truth, but then they wouldn’t be able to borrow 500 billion Euro loans, without the coverage of the Eurozone and its standard of living would remain probably at the level of Bulgaria.

4. Greece should exit the Eurozone, devaluate the new Drachma and then start to export its merchandise.

This is a good solution for economy which has unexploited capacity to produce competitive products to export. Obviously this is not the Greek case. All what would do devaluation is inflation and reduction of Greek GDP per capita bellow the Bulgarian numbers.

5. If Greece will exit from the Eurozone, (Grexit) the EU will collapse.

This claim is arrogant overestimation of the importance of Greek economy. It is hardly 1% of the EU GDP. But then the claimers who understand this say, but what about the psychological effect, that will destroy the European monetary markets. As you can see nothing of this kind happened, and the markets hardly moved during the last crisis. Everybody understood that 1% can’t destroy 99%. Since 2010, when it became obvious that the Greek economic policy of profligacy can’t anymore go on, the EU leaders prepared tools to cope with eventual Grexit. To my opinion this was the last straw the Greek government, full of self-denier demagogs tried to hold too. When they understood that no one is afraid anymore of Grexit, they surrendered and excepted the European ultimatum.

From now on new era of economic life will start in Greece. Greece, with the secured support from the EU, will have very good chance within 10 years be in completely different situation. I visited Athens 25 years ago and several times in the last years. Greece has modernized in the last 20 years. Its young population is highly educated. All is needed is to start to work, and let the young to take over, to create new economic structures, to replace the old ineffective, unproductive ones.

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