Aug 282012
 

In order to demonstrate how little I understand national and international economical affairs, here is my view of a multi-stage approach to solving Greece’s problems in the Eurozone!

Rather than lead up to it with waffle, here is the summary:

1. Help Greece exit from the Eurozone under control, but stay in the EU.

2. Implement something like a Marshall Plan to help Greece become more viable.

3. Allow Greece back in to the Eurozone when it has properly met the criteria.

It is pretty obvious that one of the most serious problems for Greece at the moment is that the current conditions imposed for receiving financial help are devastating for their society. That is at least partly because they are based on the necessary conditions for being a Eurozone member.

There would a “moral hazard” in letting Greece get financial help while not obeying all the tight rules in the timeframe concerned. It would reinforce the idea that nations can get away with not taking the Eurozone rules too seriously. So the ECB and Germany are insistent that Greece must not have any more latitude. And while they are in the Eurozone, that is arguably a good position. There is an widespread attitude in parts of Europe that the Eurozone rules don’t matter that much, yet history shows that they do.

But if Greece were not in the Eurozone, the need for such rigid rules would be less, and some rules would not apply. Financial and other help could be provided according to a different set of rules, those for the EU. Greece would have more autonomy, and the urgency of any particular action would be less.

If Greece were no longer in the Eurozone, the overall nature of the Eurozone would be different. It would still be in trouble, but one important contaminant would be absent, rather like amputating the worst affected part of someone’s body in order to save the rest.

Disclaimer: there have been many proposals for something like a Marshall Plan for Greece, but they typically get bogged down in the difficulties of doing it to a Eurozone country. I think I have seen a proposal similar to the one here, but can’t find it.

(Now I’ll get back to trying to manage my own bank account!)

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