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Lapavitsas: Euro caused catastrophe in Greece

'With healthy banks there will be also a management of the bad debts'.

Euro caused a catastrophe to Greece, according to SYRIZA MP Kostas Lapavitsas.

Speaking in a Greek TV station, he said that the euro currency has failed everywhere, while an accident in Greece would hit greatly euro and mostly its reliability.

He noted further that there is a need for a new banking system without private administrations and that with healthy banks there will be a management of bad debts.

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Comments

  1. Anonymous20/6/15 00:58

    Thought you might find the chart in the attached article of interest.

    https://hat4uk.wordpress.com/2015/06/19/european-union-in-crisis-confliect-insult-hysteria-goes-viral-but-behing-the-scenes-is-merkel-still-trying-to-avoid-what-she-sees-as-a-eurodisaster/

    ReplyDelete
  2. Anonymous22/6/15 01:20

    (1) The graph, showing lower GDP growth in the 1980-1990's versus under the Euro, indicates simply that the economy grew more quickly in those years. The same holds for the US, Germany, Japan, and China.

    (2) The Euro imposes one single monetary policy on its participants. Since the EU is not an "optimal currency are" (look it up if you don't understand) this monetary policy will be sub-optimal for a number of participants. This is why it's important that the economies of participating nations are sufficiently converged, so as to avoid the worst of the sub-optimality.

    When Greece joined, its economy wasn't sufficiently converged to the mean of the other countries (Greece entered only by presenting misleading statistics), and it's still far from converged. Greece's lagging productivity resulted in much of its indigenous industry being wiped out by competition from other Eurozone contries, with heavy job losses as a result.

    (3) Leaving the Eurozone and returning to the Drachme will certainly benefit the Eurozone, and it will probably (in the long run) benefit Greece. In the short run however, Greece will face more hardship. The reduction of its real wages to regain competitiveness (which is currently being resisted) will simply take place through an (almost certain) depreciation of the Drachme. That means (among other things) that all imports priced in hard currency (energy, machinery, consumer goods, pharmaceuticals) will show steep price rises. Not a happy prospect. Apart from that, Greece's debts will remain payable in Euros.

    ReplyDelete

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