This whole problem is entirely new and very complex. The problem is also very urgent. In my opinion some of the main problems could be resolved as indicated below.
In order to declare itself bankrupt, Greece must leave the EUROZONE, adopt the New Drachma as its currency and then declare the Parity of the New Drachma as a % of the EURO. (e.g. 35% which represents a devaluation of 65%). Greece must then be prepared to support the parity of the new Drachma against any attack on the financial markets.
Greece must also then:
- Devalue all foreign currency liabilities at the same rate of 65 % held by the State or by its banks and inform the creditors of the change.
- Decrease all internal assets and liabilities in Greece by 65%, such as rent, pensions, salaries, taxes etc .
- Banks should buy Euros owned by Greeks or Tourists at the new exchange rates. No other system would work.
Other important steps will be discovered as time goes on. The Greeks must now learn to be good neighbours when unexpectedly some people or problems have been forgotten or not covered.
The reason why Greece must leave the EUROZONE is because it must devalue internal costs in order to become competitive on the international markets, particularly the tourist market. The loans obtained from the Eurozone prevented Greece from making the devaluation which was necessary.
This will be a painful experience not only for Greeks, but also for creditors of Greece, whether they are individuals, companies, banks or countries. If the EURO was not involved, this would be an "internal devaluation" by Greece.
The Greek experience will serve as a good example of what to do in the future. This situation has not really occurred before. There are countries which will be watching closely; not to mention them, would be remiss. They are well known, Italy, Spain, Portugal and Ireland.
In order to declare itself bankrupt, Greece must leave the EUROZONE, adopt the New Drachma as its currency and then declare the Parity of the New Drachma as a % of the EURO. (e.g. 35% which represents a devaluation of 65%). Greece must then be prepared to support the parity of the new Drachma against any attack on the financial markets.
Greece must also then:
- Devalue all foreign currency liabilities at the same rate of 65 % held by the State or by its banks and inform the creditors of the change.
- Decrease all internal assets and liabilities in Greece by 65%, such as rent, pensions, salaries, taxes etc .
- Banks should buy Euros owned by Greeks or Tourists at the new exchange rates. No other system would work.
Other important steps will be discovered as time goes on. The Greeks must now learn to be good neighbours when unexpectedly some people or problems have been forgotten or not covered.
The reason why Greece must leave the EUROZONE is because it must devalue internal costs in order to become competitive on the international markets, particularly the tourist market. The loans obtained from the Eurozone prevented Greece from making the devaluation which was necessary.
This will be a painful experience not only for Greeks, but also for creditors of Greece, whether they are individuals, companies, banks or countries. If the EURO was not involved, this would be an "internal devaluation" by Greece.
The Greek experience will serve as a good example of what to do in the future. This situation has not really occurred before. There are countries which will be watching closely; not to mention them, would be remiss. They are well known, Italy, Spain, Portugal and Ireland.
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