Even though the majority of the newly elected Greek cabinet is staunchly pro-euro and pro-bailout, would Greece be better off leaving the Eurozone?
By: Ringo Bones
Before the Greek pro-euro and pro-bailout political parties were elected into office in Greece’s recent election, many tenured economists – strangely none of them appeared to be Greek – suggested that Greece should leave the euro and reintroduce the good old Greek drachma as the best solution to the country’s ongoing debt crisis. These “tenured economists” oft cite on how the Argentine government solved the Argentine economic crisis of 1999 to 2002 in which the Argentine government drastically devaluated their own currency – the Argentine peso – in order to end its own debt crisis; a method which surpasses the dire expectations of economists at that time. The question now is: Will the “Argentine Method” work in solving Greece’s ongoing debt crisis?
Before we proceed further, here’s a scope of the current Greek debt crisis – every Greek man, woman and child now owes 31,000 euros to the EU and other foreign lenders. An epic problem in which a few years of EU sanctioned austerity measures seems unable to solve. The Greek government’s rationale for joining the Eurozone when the euro was first introduced back in the New Year’s Eve of 2002 was that it was hope that EU members with weak economies – especially Greece – would be helped by the more economically prosperous EU members. Strange as it seems, Greece’s current dire economic situation mirrors that what it had experienced back in 1998. But will a Greek euro exit and the reintroduction of the good old Greek drachma and then drastically devaluating it – akin to how Argentina solve their own economic crisis back in 1999 to 2002 – be the ideal solution to Greece’s current debt crisis?
Strange as it seems, the BBC sends some of its field reporters to Greece a few months before the recent election in order to interview everyday Greeks experiencing their country’s crippling financial crisis first hand. The report had shown that a little over 50% of Greeks believe that exciting the Eurozone and reintroducing the Greek drachma won’t solve its current economic crisis because they believe that their current economic problem is primarily caused by the collusion of corrupt Greek politicians and big financial firms – both Greek and foreign – not paying their full tax rates. Over half of the Greeks say that a reintroduction of the old Greek drachma and then drastically devaluating it will only give license to corrupt Greek politicians to print their own money.