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Give Greece a Break

greek-buildings

As Greece and its future in Europe hang in the balance, the bureaucrats in Brussels seem to lack the compassion necessary to reassure the Greek people. After an overwhelming “no” vote in the referendum, everyday Greek citizens have voted against more austerity, and the prime minister, Alex Tsipras, is being squeezed by the IMF, European Bank and Germany, as if the vote never happened.

As Greece and its future in Europe hang in the balance, the bureaucrats in Brussels seem to lack the compassion necessary to reassure the Greek people.

Caught between a rock and a hard place, Mr. Tsipras has been forced to agree to steps his people oppose, including additional cuts to his citizens’ pensions. I think he should tell them where to put their precious money. When he does so, and the European Union realizes the hit their currency will take as a result, he will have more leverage to negotiate something acceptable with more compassion for his predicament.

Perhaps, he can describe the breakup as a temporary exit from the Euro to minimize the overall effect and preserve his options. But his heartless creditors must realize they can either receive a negotiated payment of Greek’s debt or no payment at all. Despite its size, Greece is needed by the European Union to shore up their other weak economies such as Spain, Portugal and even France. When the European Union comes to its senses and realizes this, a real solution can be found.

The Tyranny of a Currency

currency

The institution of the Euro may have seemed like a work of genius as a surreptitious way of binding the nations of Europe more tightly together, but the experience has been a mixed blessing for some of them.

without any control over monetary matters, individual nations lack any incentive to delay gratification.

The problem with the set-up is exactly the fact that the nations are not bound together, with each one setting their own tax and spending policies. Priorities differ from nation to nation, and without any control over monetary matters, individual nations lack any incentive to delay gratification.

The German work ethic, while admirable, has not been adopted by other nations in the Euro zone, primarily the nation of Greece. And without the ability to adapt monetary policy to the spending level, or providing a stimulus when needed, the Greeks are trapped, hoisted by their own petard.

Imposing German values on Greece will never work because the two peoples are not alike, and never will be. So what is the best solution to the current conundrum?

Inevitably, Greece must abandon the Euro and be allowed to sink or swim as a nation based on their own decisions. When Greece assumes responsibility for Greece, their attitude towards life, taxes and government policy will assume a more adult hue.

The departure should be executed as smoothly as possible to minimize unnecessary hardship on the other nations still using the Euro. That’s the best course of action for all concerned.