There are some who argues that a Grexit will do Greece good and some who don't. Roche argued that it would have been very good in 2011 but now the cow is out of the barn.
"5 years ago I said Greece should definitely leave the Euro. My basic reasoning was that full integration is not going to happen and Greece will have to suffer through depressionary deflation in order to allow an internal rebalancing of their economy to occur. That view has turned out to be pretty spot on. Greece has undergone a modern day depression by any standard. And if they’d brought back the Drachma many years ago they could have avoided a lot of the deflation and depression."
"Now, the economists on the left say that Greece should leave because their new currency will make them so much more competitive. But I am not so sure that’s the right move at this point. The time to leave was before the depression set in. Not 5 years after it set in. And the reason why is simple. At this point Greece faces no good options. Staying in the Euro is going to very likely involve low growth and further austerity. But the alternative looks perhaps more frightening at this point. And the alternative is a high inflation and perhaps even a hyperinflationary nightmare. In fact, if there was ever a recipe for hyperinflation then Greece meets all the criteria."
http://diaryofarepublicanhater.blogspot.com/2015/07/cullen-roche-on-greece.html
I get his point-hyperinflation is the threat of very weak and endangered governments-though I don't think that the Greece government is literally about to be overthrown. So there is a modicum of stability there.
It's not just economists on the Left who say Grexit-we have a couple of excellent economists of the Right who say likewise-Lars Christensen and Nick Rowe. See Nick;'s latest
http://worthwhile.typepad.com/worthwhile_canadian_initi/2015/07/euro-moamoe-plus-drachma-moe.html#more
http://diaryofarepublicanhater.blogspot.com/2015/07/a-grexit-in-all-but-name.html
http://diaryofarepublicanhater.blogspot.com/2015/07/lars-christensen-grexit-will-restart.html
Look I recognize that we are in uncharted water here with a Greece leaving the euro and who knows just how painful it could be? It is in further trouble as it is so dependent on the EU for its exports.
However, the Germans keep upping the ante. If nothing else their latest demand for 27% of Greek GDP as collateral would seem to show once and for all that they truly want Grexit-they are more or less trying to come up with the most odious terms they can imagine-reasoning that surely Greece will finally blink and bring back the drachma tomorrow.
I mean can we really still see Grexit as the worst case scenario-next to giving up 27% GDP? While we have to movement for Scottish independence in Britain we have the Germans offering Greece a new role as their protectorate in exchange for more euros. Is the choice really down to Roche's hyperinflation and simply selling the country to Germany?
As I noted in my last post-linked above-we may have the drachma come back very soon anyway-maybe tomorrow-if the Greeks don't get more euros soon.
"DJN also said that given that Greek banks are reportedly set to run out of cash as early as Monday, and with no new funding imminent, Athens may have to start printing its own money again."
Meanwhile there isn't a sense of urgency on the part of the EU:
"And DJN notes that Hans Schelling, the Austrian Finance Minister, was doubtful that a new deal could be done before July 20, when Greece has to repay 3.5 billion euros in bonds and 700 million in interest to the ECB."
If the Greeks can't get more euros by July 20 how long can it be till the drachma comes back from the dead?
"5 years ago I said Greece should definitely leave the Euro. My basic reasoning was that full integration is not going to happen and Greece will have to suffer through depressionary deflation in order to allow an internal rebalancing of their economy to occur. That view has turned out to be pretty spot on. Greece has undergone a modern day depression by any standard. And if they’d brought back the Drachma many years ago they could have avoided a lot of the deflation and depression."
"Now, the economists on the left say that Greece should leave because their new currency will make them so much more competitive. But I am not so sure that’s the right move at this point. The time to leave was before the depression set in. Not 5 years after it set in. And the reason why is simple. At this point Greece faces no good options. Staying in the Euro is going to very likely involve low growth and further austerity. But the alternative looks perhaps more frightening at this point. And the alternative is a high inflation and perhaps even a hyperinflationary nightmare. In fact, if there was ever a recipe for hyperinflation then Greece meets all the criteria."
http://diaryofarepublicanhater.blogspot.com/2015/07/cullen-roche-on-greece.html
I get his point-hyperinflation is the threat of very weak and endangered governments-though I don't think that the Greece government is literally about to be overthrown. So there is a modicum of stability there.
It's not just economists on the Left who say Grexit-we have a couple of excellent economists of the Right who say likewise-Lars Christensen and Nick Rowe. See Nick;'s latest
http://worthwhile.typepad.com/worthwhile_canadian_initi/2015/07/euro-moamoe-plus-drachma-moe.html#more
http://diaryofarepublicanhater.blogspot.com/2015/07/a-grexit-in-all-but-name.html
http://diaryofarepublicanhater.blogspot.com/2015/07/lars-christensen-grexit-will-restart.html
Look I recognize that we are in uncharted water here with a Greece leaving the euro and who knows just how painful it could be? It is in further trouble as it is so dependent on the EU for its exports.
However, the Germans keep upping the ante. If nothing else their latest demand for 27% of Greek GDP as collateral would seem to show once and for all that they truly want Grexit-they are more or less trying to come up with the most odious terms they can imagine-reasoning that surely Greece will finally blink and bring back the drachma tomorrow.
I mean can we really still see Grexit as the worst case scenario-next to giving up 27% GDP? While we have to movement for Scottish independence in Britain we have the Germans offering Greece a new role as their protectorate in exchange for more euros. Is the choice really down to Roche's hyperinflation and simply selling the country to Germany?
As I noted in my last post-linked above-we may have the drachma come back very soon anyway-maybe tomorrow-if the Greeks don't get more euros soon.
"DJN also said that given that Greek banks are reportedly set to run out of cash as early as Monday, and with no new funding imminent, Athens may have to start printing its own money again."
Meanwhile there isn't a sense of urgency on the part of the EU:
"And DJN notes that Hans Schelling, the Austrian Finance Minister, was doubtful that a new deal could be done before July 20, when Greece has to repay 3.5 billion euros in bonds and 700 million in interest to the ECB."
If the Greeks can't get more euros by July 20 how long can it be till the drachma comes back from the dead?
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