Tuesday, 15 May 2012

The euro crisis: Kabuki characters in a Greek drama

Juncker: "I don't envisage even for one second Greece leaving the euro-area. This is nonsense, this is propaganda,"

While Greece is burning, the euro zone decision  makers are continuing their version of the traditional Japanese kabuki theater. Particularly, the euro zone chairman, Luxembourg´s Jean-Claude Juncker has aquired an important element of the kabuki, in which the actor holds a picturesque pose to establish his character: 

The 17 finance ministers of the euro zone didn't discuss any possibility of Greece leaving Europe's currency union at their meeting Monday, group chairman Jean-Claude Juncker said.
"There is an unshakeable desire to keep Greece in the euro zone," Juncker told a joint briefing after what appeared to be a generally inconclusive meeting.
"The exit of Greece from the euro zone was not the subject of our discussions today," Juncker said. "Absolutely no one has argued for that position."
Read the entire article here
It is probably true that "no one" argued "for that position" in the formal discussions, but of course it is clear that the exit of Greece from the euro zone was the only important question in the real, unofficial discussions of the finance ministers. 
These are the harsh facts (also known to Juncker, even if he does not want to admit it publicly): 
After Greek voters rejected austerity in last week's election, plunging the country into a political crisis, Europe has been searching for a Plan B for Greece. It's time to admit that the EU/IMF rescue plan has failed. Greece's best hopes now lie in a return to the drachma.
Greece has been in intensive care for years, but the patient, instead of recovering, is just getting sicker and sicker. In a confidential report, which SPIEGEL has seen, experts from the IMF arrive at a devastating verdict. The country, they write, has only "a small industrial base" and is characterized by "structural incrustations" and an "excessively large role of the public sector."
In Greece's Best Interest
It's time to rethink the treatment. The Greeks were never ready for the monetary union, and they still aren't ready today. The attempt to retroactively bring the country up to speed through reforms has failed.
No one can force the Greeks to give up the euro. And yet it is now clear that withdrawal would also be in the country's best interest.
But only a Greek withdrawal from the euro zone will give the country a chance to get back on its feet in the long term. The Greeks would have their own currency once again, which they could then devalue, making imports more expensive and exports cheaper. As a result, say American economist Kenneth Rogoff and others, the Greek economy could become competitive again.

So, please Mr. Juncker, the sooner you return to reality - and leave the kabuki to the Japanese - the better!

(image wikipedia)

1 comment:

NNoN said...

Message to Eric, who commented on this post: Due to my own mistake, your comment was accedentally deleted. I apologize!