The euro crisis will only be made worse if Greece leaves. It could be a disaster if she leaves in an unplanned and chaotic way?
So what is the solution?
Germany wants Greece to take more suffering and pay up to the German bankers. You can see why they want that - bankers always shout for more, and usually get it. But Greece argues that democracy must be upheld. And one can see why they say that.
So which do we support - democracy or bankers?
However, let's turn the argument on its head, and go back to basic principles. What is the cause of the present crisis.
We need to deal with corruption in the Greek political and business classes - and possibly a bit of Old Labour feather bedding too. However, the key structural reason for Greece's problems is that exchange rates have been to rigid. The exchange rate between Greece and Germany has been fixed at one-to-one since the euro was introduced in 2002. That's a long time to sustain what is essentially an unsustainable rigidity. Grexit would be one way of resolving that. But that would create more problems than it solves. In particular, it would not resolve the fundamental tension which exists between Germany and the rest of Europe.
The only way to resolve the exchange rate rigidity between Germany and Southern Europe in a permanently effective way is that GERMANY SHOULD LEAVE THE EURO. This could be done in a spirit of celebration rather than disaster, and would remove the question of "Who next?"
Understandably, German exporters will not like this idea. It will make exporting more difficult, and importing easier. But it will shift the power in Europe in a more egalitarian manner. And it is just and accords with democracy.
So what is the solution?
Germany wants Greece to take more suffering and pay up to the German bankers. You can see why they want that - bankers always shout for more, and usually get it. But Greece argues that democracy must be upheld. And one can see why they say that.
So which do we support - democracy or bankers?
However, let's turn the argument on its head, and go back to basic principles. What is the cause of the present crisis.
We need to deal with corruption in the Greek political and business classes - and possibly a bit of Old Labour feather bedding too. However, the key structural reason for Greece's problems is that exchange rates have been to rigid. The exchange rate between Greece and Germany has been fixed at one-to-one since the euro was introduced in 2002. That's a long time to sustain what is essentially an unsustainable rigidity. Grexit would be one way of resolving that. But that would create more problems than it solves. In particular, it would not resolve the fundamental tension which exists between Germany and the rest of Europe.
The only way to resolve the exchange rate rigidity between Germany and Southern Europe in a permanently effective way is that GERMANY SHOULD LEAVE THE EURO. This could be done in a spirit of celebration rather than disaster, and would remove the question of "Who next?"
Understandably, German exporters will not like this idea. It will make exporting more difficult, and importing easier. But it will shift the power in Europe in a more egalitarian manner. And it is just and accords with democracy.
