Konstantinos Katsanevas 
The Greeks have always felt a need to be wedded to a supposed European identity. In order for full integration, adoption of a colorful new currency would give them ‘worldly’ status. You see it was always about image. This new sense of self allowed the Greek to one-up
top of that create a definite distinction from his Balkan brothers. What a
deal! Add to that with image came a
false sense of security, and a surge of capital - not just for Turkey but for
all the peripheral economies of the Eurozone.
On their high horse they rode right to the grave. Greece
It seems the only whispered ‘Grexit’ was now gaining some ground. So what happened? The truth is not Mitt Romney’s campaign theme,
Europe’s welfare state is not to blame. It can’t be
fiscal recklessness, nations outside the euro have huge deficits with
burdensome debts and still seem to borrow at staggeringly low interest rates of
2% or lower. In fact, Paul Krugman has the right idea - the introduction of the
euro without proper institutional foundation effectively reinvented the defects
of the gold standard. Great Depression anybody?
what’s left are two viable options: continue the Europeanization illusion or
get out. The benefits of a soft currency outweigh the costs of default.
Furthermore, an orderly exit will be painful and will bring collateral damage,
but as professor Nouriel Roubini puts it, “it can be contained”. Greece
The argument is sound, give control of monetary policy and depreciate currency effectively restoring international competitiveness and growth. But lets retract; give Angela and her austerity hungry contemporaries a chance. October 2009 - serious doubt on
’s ability to meet its debt
obligations led to crisis of confidence. May 2010 – queue 110bn euro aid to
avert meltdown of economy with the condition of austerity measures; troika
sweeps in to save the day. Unemployment past the 15% threshold, debt to GDP
ratio hit 127% while public sector cuts in wages and pensions stirs social
upheaval. By the end of 2011 troika leaders agree to a second bailout package
of 130bn euros and, since things are looking bleak private creditors holding
Greek government bonds are forced to accept a 53% face value loss. Debt to GDP
ratio reduced from a speculated 198% to a round 160% (2012 forecast). To date,
troika has extended reform schedule deadlines from 2013 to 2015 and finally
2017 before it takes off Greece ’s
training wheels and lets its government tackle the burden alone. Yet slow and
orderly disintegration of economy and society looms. Look upon your work
Lets take a look at the Greek perspective. Here’s some context.
main industries include tourism, merchant shipping and agriculture with 85% of
its output coming from the service sector. Under the Drachma during post-WWII,
Greece experienced growth rates ranking first in all of Europe and second in
the world, reaching a high of 11.15% annual GDP growth in 1961 (world bank
source). Today it stands at a meager -6.9% and since joining the Euro, Landon
Thomas Jr reported a 30% decrease in international competitiveness. So who is at fault here? Is it the lazy
Greeks? Negative – Paul Krugman himself admits that Greeks work longer hours
than anyone else in Greece Europe and definitely more
than the Germans, putting in roughly 42.2 hours per week compared to their
so-called Northern brothers at 35.6. Now you’ll scream ‘yes, but what about
labour productivity? That’s a better measure!’ It’s low, in fact its yields
weigh in at 25% below the European Union average – but similar are ’s yields by
American standards. Yet its not the poster child for the 2008 subprime crisis. Mississippi
It becomes clear then, that the major contributing factor for
- after corruption, tax evasion and insolvency – is the euro. The origin of the
crisis is not its Hellenization, but its Northern counterpart. Certain European
leaders had the idea that a monetary system could work without a strong central
government. Look no further then this; it is the weakness of an all-around
progressive idea that has brought forth the tsunami. Greece
Instead of continuously agreeing on short term plans that put off the inevitable
must act now to prevent further economic implosion. Or wait it out, the alternative put forth by
Adam Davidson in the New York Times,
is that eventually the bond market will have to do the dirty work. Investors
will soon enough lose trust in everyone, unload European bonds and send the
euro to its demise. Put in perspective, Simon Kennedy, a Bloomberg analyst,
stated that Citigroup Inc. economists forecast Greece departing on January 1,
Nevertheless I digress. Blame the euro.
The Drachma will drop by 50% - 520 Drachma for 1 euro - and capital will leave the country that much faster. The Greek will lose two things in this scenario, part of his ‘worldly’ identity and his Mercedes. But what will eventually come from his cheap work, is foreign direct investment and more importantly an export boom. The soft Drachma at dirt-cheap prices will produce a foreign exchange surplus by the end of that same fiscal year. This will cause a domino effect within the nation, keeping capital inflow by buying its own oranges rather than shipping them from
. This is what is best for
this nation as a whole. Don’t take my word for it, take a look at a similar
economic paradigm that of Argentina ,
when it divorced its peso-dollar peg in 2001. Argentina
can be contained if there is swift and proper recapitalization of weak banks
and further preventative actions are taken – something that Angela has been preparing
go is the best decision for the long-term - for everyone. Yes, it will be
painful but something must be done this moment, and since Euro-bonds are out of
the question a Grexit is the only way out. Greece
Bank, Google Data Viewer and World. "GDP Growth Rate." Developmental. n.d
HYPERLINK "http://www.google.com/publicdata/explore?ds=d5bncppjof8f9_&ctype=l&strail=false&nselm=h&met_y=ny_gdp_mktp_kd_zg" \l "!ctype=l&strail=false&bcs=d&nselm=h&met_y=ny_gdp_mktp_kd_zg&scale_y=lin&ind_y=false&rdim=country&idim=country:GRC&ifdim=country&hl=en&dl=en"
Davidson, Adam. "The Euro Crisis is Back from Vacation." The New York Times (2012): 1.
Katsanevas, Theodore. The Myth of the Euro.
A.A. LIVANI, n.d. Athens
Krugman, Paul. "
as a Victim." The New York Times (2012): 1. Greece
—. "What Ails
Europe." The New York Times
Republic, Hellenic. Hellenic Statistical Authority. Press Release. Pireaus: Hellenic Republic, 2012.
Rossi, Vanessa. "The Euro Will Survive." The New York Times (2012).
Roubini, Nouriel. "Bring Back the Drachma." Toronto Star (2012): 1.
The Gaurdian. Who Works the Longest Hours in Europe? 2012. 30 October 2012 <http://www.guardian.co.uk/news/datablog/2011/dec/08/europe-working-hours>.
Thomas, Landon. "Whispers of Return to Drachma Grow Louder in Greek Crisis." The New York Times (2011): 2.
1. Ο Κωνσταντίνος Κατσανέβας του Θεοδώρου, είναι τελειόφοιτος φοιτητής στο Πανεπιστήμιο του Τορόντο στον Καναδά, και το παρών κείμενο προέρχεται από δική του μελέτη και άρθρο γνώμης που υπέβαλε στο Πανεπιστήμιο.