Tuesday, October 04, 2011

They Should Just Let Greece Go

Instead of trying to "save" Greece - and in the process making everyone worse off - they should cut their losses. Bad News from Athens: Greek Budget Figures Complicate Bailout Efforts - SPIEGEL ONLINE - News - International

For months the question has been "will they, or won't they" save Greece. Again.

If you put it to a vote in Germany, the German public would say "No!" (Or what is the German expression that means, "Hell No!" - which is probably more to the point.) If you put it to a vote in Greece the population would probably say no to more "austerity." (As if living within your means is a bad thing.)

But it is probably a moot point, since Greece won't even meet the commitments it made last year - for the bailout that was supposed to fix everything.
On Sunday, Greece announced that its 2011 budget deficit will be 8.5 percent of gross domestic product, well higher than the 7.6 percent it targeted last year as part of its ambitious plan to return to fiscal health. And on Monday, new figures indicate that the country's economy will contract by 2.5 percent in 2012 instead of the hoped for growth of 0.6 percent. Stock markets around the world plunged as a result
Under those circumstances, no bailout can be seen as the "last," until you take over all of the Greek debt obligations and dump them on Germany (and to a lesser extent, the Scandinavian countries.) Then comes Spain and Portugal.

Maybe the solution is for Germany to leave the Euro zone. Let the rest figure it out on their own.
"Greece is bankrupt," said Michael Fuchs, deputy floor leader in parliament for Merkel's Christian Democrats, in comments to the daily Rheinische Post. "Probably there is no other way for us other than to accept at least a 50 percent haircut on its debt."
Why anyone would ever loan money to Greece is beyond me.

No comments: