How To Deal With Greece

As much as I hate to discuss Greece again, I feel compelled to after yesterday’s referendum with its irrational outcome. As I’ve said (or technically speaking written) it before, and unfortunately, I’m forced to say it again: Greece, thousands of year ago more or less the cradle of modern civilization and philosophy (including the far greatest philosopher, Aristotle) as a nation has sunk increadibly low. A majority of Greeks apparently thinks that they can vote to get money from other countries.

Yes, many Greeks have suffered a lot during the crisis, but it was self-inflicted (though admittedly that only holds for Greece as a nation, many innocents have suffered, while many corrupt politicians and bureaucrats have benefited) by too much borrowing, fraud, corruption and incompetence and Greece has already received massive amounts of aid, which is of course what the combination of new “loans” and writedown of previous debts in effect amounts to (plus there’s the aid it receives from the EU budget).

While it would be a good idea for other EU leaders to make some “face saving” (for Greek far-left leader Tsipras that is) compromises on the specifics in order to allow Tsipras to assert that he has “won” in the negotiations (and so allow him to make his Marxist party accept any hypothetical future deal), there should be two principles EU leaders shouldn’t compromise on: first, no debt writedown and interest payments which should match borrowing costs of creditors (which, conveniently, is near zero these days) plus at least a small premium and second, no increase in debt levels, which is to say Greece should run a so-called primary surplus matching or exceeding its interest payments.

If Tsipras refuses to accept that then there should be no more money to the Greek government. And the ECB should cut of liquidity to the Greek banking system as their exposure to the Greek government makes them insolvent. Meanwhile, all EU funds to Greece should be cut off (Greece is the biggest net recipient of all countries that wasn’t part of the communist bloc during the cold war). If the Greeks don’t like the terms for cooperation, then let them fend for themselves.


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