The Greek situation that the world has painfully watched seems to be finally coming to a head. They should never have been included in the Euro in the first place. They never intended to fiscally manage their government to stay within the confines of the Euro system’s constraints. Mark Weisbrot of the New York Times agrees.
I have seen a lot of Chicken Little writing that the Greeks will go back to papyrus scrolls if they don’t stick it out with the Euro. However, I think they are wrong. They need to default on their debt, go back to the Drachma, and try and use free market capitalism to regrow their economy. In the short run there will be pain and suffering. In the long run, they will be better off if they do it correctly.
How powerful are free market forces? Argentina defaulted on it’s debt and rebuilt it’s economy. The only thing holding Argentina back is the socialist/quasi communist government it has overseeing the country. If they people ever voted them out, their economy could explode with all the resources they have.
Greece sits in a part of the world near where east meets west. Don’t discount geography. Chicago would never be the city that it is without the staying power of it’s geographic place in the United States at the base of a big lake that runs into the Mississippi River. It’s meaningful even today because of all the network effects of infrastructure that have grown up over time.
Woe is Greece the IMF will say. I say give the IMF and the Euro the moutza. The IMF wants the Greeks to crack down on tax evasion. Ever been to a Greek restaurant, a small breakfast diner? The Greeks invented tax evasion. No one can stop it. Tourism and shipbuilding can be two catalysts to re-develop Greece. Tourism because the drachma will be cheap relative to other currency. Even Americans will be tempted to go to Greece and bring back several pairs of sandals. Shipping because it’s a historical core competency of theirs. The world needs better, more fuel efficient ships for global commerce. The Greeks can build them. Bring back the drachma and aggressively employ free market capitalism to rebuild.
thanks for the link Naked Trader.