June 20, 2011

Finally some sense on Greece

Finally somebody there is a politican talking sense about the Greek debt crisis, and it is Boris Johnson. Greece is bankrupt, so it should go bankrupt. Greece, like the UK, has no option other than to cut the size of its state because nobody can spend more than they earn year after year. Greece cannot grow its way out of trouble because being shackled inside the Euro it is going to continue to loose competitiveness. It should therefore get out of the Euro so that its currency can float downwards to the level that is appropriate for their economy. Even if it could start growing again it will never pay back the loans that it has, so it should not take on more loans that it will not pay back either. Before this crisis is over there is going to be a lot of pain for those holding Greek debt, but delaying things will only make it worse as the debts will be larger. Therefore it should just hold up its hands and admit that nobody that anybody stuipd enough to lend it money is not going to get that money back before the outstanding debt that it is going to default on gets even larger.

Not that this will happen though for three reasons. If Greece defaults cause huge problems for France and Germany. It will bankrupt the European Central Bank. Plus it will destroy the myth that european integration is inevitable, and without that myth to fall back on Eu-philes don't have many arguments left to support their dreams. The EU elites will not allow such an obvious hole to get blown in the side of their project. Instead of the correct option there is also a second option, the EU (meaning Germany) could keep bailing Greece out for as long as it cannot pay back its loans and since Greece is bankrupt that means throwing money at Greece forever. For this they will expect some say Greek financial policy in return, so that they can claim that Taxpayers money is being not wasted (which it is), and so the wheels of EU integration continue to grind onwards lubricated by blood on the streets of Athens.


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