If Greece Stays in the Eurozone, It Has No Future

I too agree that Greece was harmed by its eurozone entry since the way the eurozone operated benefited the core countries and not the periphery:

i) The ECB focused on maintaining monetary stability rather than adjust the currency to the needs of the economies, i.e. when growth was necessary, the ECB kept rates quite high and maintained a hawkish agenda

ii) Paying the German workers less that their productivity output causes trade imbalances: Germany overcompeted with the periphery by keeping its wages low for over a decade while peripheral wages went up so while Germany ran consistent trade surpluses, the periphery ran consistent trade deficits something that led to chronic trade imbalances, fiscal deficits and debt

iii) Less developed economies cannot share the same (hard here) currency with the developed ones without some form of fiscal transfers to balance out the disparities as this will destabilize the currency over the long run: the eurozone is not an optimal currency union

iv) Internal devaluation forced on Greece by Brussels will intensify disparaties within the Greek society and undermine social cohesion, will increase the actual value of the debt, will increase cost of living pushing more people into poverty and destitution, will decrease aggregate demand and tax income, will hurt the banks by reducing the ability of the Greeks to service their household debt and make deficit reduction targets unattainable

v) Greece cannot recover financially within the eurozone as it won't be able to regain its competitiveness soon enough to prevent economic collapse as hundreds of thousands of businesses are closing down, hundreds of thousands of people loose jobs and the values (real estate, stock market, etc) fall faster than any growth can compensate for them

vi) More austerity imposed by Brussels as a prerequisite to staying in the euro is going to precipitate a Greek economic collapse rather than help Greece stand on its feet

vii) The Greek debt is more than such a small and tattered economy can ever pay back and the interest payments drain the economy of its creative funds necessary for constructive investments that will help its economy recover and catch up with the global competition: stagnation and financial collapse is the future of Greece under such a heavy debt load

The health of the economy should be the priority of the Greek state. Preventing an outright economic collapse and further suffering of the Greek people should be the prerequisitive for any debt servicing. Without the economy on a steady footing and without people back at work, Greece cannot possibly continue servicing such an enormous debt. The outcome will be a disaster of great proportions with unforseen consequences.

This should be made clear to the European creditors. That is why a strong Greek government is necessary to come out of the elections that will have enough negotiating power and a fresh mandate to bring the Greek perspective to the bargaining table.

TP 9:59PM June 09, 2012

I am also a Greek native, and I don't see any substance in the theories of Mr. Kallianiotis. The EU is not a collection of rogue states. When the Euro was adopted across Europe, its value was 0.86 to a dollar. The European trade success helped it rise to around $1.43 dollars each. Greece's major source of foreign currency is tourism, and small amounts of agricultural products, lemons to Russia, oranges to Europe, olive oil to the U.S., and similar minor exports of nominal value. There are few multinational corporations in Greece to get Greek profits out, and the major industries are government owned and run - except a few. That is why the Europeans have been pushing Greece for privatizations of major Greek industries to improve efficiency, because they are bloated with inefficient public bureaucracies.

European integration was good for Greece, that is why 70% of Greeks want to stay in the European Union. It was systemic corruption, and politicians beholden to public employees Unions that sunk the country. That is why the Syriza party rose to prominence from obscurity, Its leader, Alexis Tsipras, promised Greeks not only to scrap the European austerity measures, but also to hire 150.000 new public employees! And that already on top of an over-bloated Greek government bureaucracy!

Another example of public corruption: In the Greek Island of Zakynthos there were 700 Greeks who were receiving blindness disability pension, most of them with normal eyesight. They had obtained them with bribes (Greek "Rousfeti"). The EU bailout forced Greece to re-examine phony pensions, and, lo and behold, 500 of those 700 were phony! Those are the maladies that sunk Greece, not European mischief or an EU membership that is disadvantageous to its members - as Mr. Kallianiotis theorizes.

Economics is not a science, and economist are not scientists. If they were, there won't have been a Wall street collapse, not JP Morgan Chase would have lost $ 2 billion in an eye blink. And the best economic brains on Wall Street that tried to explain it on the CBS Evening News admitted that they had no clue how it happened! All they said: "It is too complicated." That is why kings and emperors over the centuries looked to astrologists for advice on how to run their empires, not to economists.

Nikos Retsos, retired professor of political sciences

Nikos Retsos of IL 4:17PM May 16, 2012