To understand the predicament that Greece faces, consider the constraints of dollarization

Chapter Dollarization

Article Hegemonic Currencies During the Crisis: The Dollar Versus th...

This is one of the best questions I have read. From my limited perspective, it does not seem possible for Greece to repel austerity without abandoning the Euro and Eurozone unless some are willing to take a "haircut."

When something is unsustainable, eventually something will change. In this specific case, I suspect change depends on the complex interaction of self-interest and the collective interest along with the sacrifice(s) those connected with it are willing to make.

@Rob Catlett,

I couldn't agree more - I do not see how not escaping the Euro will relieve Greece's balance of payments constraint, and, thus, crate the space for expansionary fiscal policy.

Cheers,

D.

Unless Germany undertakes policies to reduce its saving rate and export surplus, it can't.  See Michael Pettis, The Great Rebalancing.

For Greece to decide the appropriate policy, decision makers has to consider many sides, one is related to its trade profile, this can be explained by referring to the theory of optimal currency area, which allow to estimate the losses and gains of trade either by joining or leaving the currency zone... Simply and briefly, if the main trade partners are in the EU zone and use Euro, gains of staying in the optimal currency area is larger than the losses !

Other sides of the story is not clear for me, giving that i originally come from Egypt, although I am researching now in Germany.

I wonder why there is so much emphasis on leaving a unified zone and becoming independent, despite the fact that across the Mediterranean we as independent countries are opting to a unified framework of politics, economics and infrastructure that group our countries together. Again, I am not judging, i don't know other sides of the story, but what I know, is that always group work perform better with every dimension compared to individual work.

This is a question of economic policy and more a issue of geo-political ethics. Germany has simply over-played the austerity card, resulting a loss of goodwill within the EU. It is Germany which is going to pay the price for not accounting the social impact of its economic brutalism, not Greece. Only a total socio-path would now endorse a continuance of corrupted austerity polices due to the damage being suffered by the European demos..

In other words, there is no choice but to move on from austerity. As for Greece's creditors...losing your shirt the price of an education in economic realism.

A very complicated question! However, Greece should build (maybe) a new political coalization with peripheral Countries (PIIGS) to change UE parameters/criteria. For example, they could spin off investment expenditure by deficit/GDP relationship. In addition, BCE should guarantees Greece debt. The problem is Germany! In fact, it has strongly reduced its financial resources exposition to Greece; now, Germany has no reasons for interest.

Renegotiating the debt, right? And threatening to leave the euro if it doesn't get the support of other EU countries for a debt reduction and reasonable payment scheme. But I guess if this "threat" doesn't work, then it's bad news for Greece!!! 

I think that it's time to move on from austerity.  So many studies have shown how EU countries that were badly affected by the crisis also have had their economies reduced by austerity.  The potential gains for Greece have been the reform and standardisation of their banking and reform of their welfare systems.  However, there are no civil servants left to implement the policies put in place by the new government and people all over Greece are not being paid.  It is a country on the brink.  I don't think there are any easy answers and to be honest, I'm not confident of any real change, whether they stay in the EU or not.  I think the one thing that will keep Greece in the EU is that it would be far too expensive to undo all the legislative and systemic changes that have occurred to be a part of the EU.  Just the re-implementation of a Greek currency alone is prohibitive to change.

The best solution for any country to come out of economic crisis is TOP TAX SYSTEM designed and developed by Varma. The text documents along with working modules are available on Reserachgate. The concomitant study of the text document along with the working module is necessary to understand this new economic system.

Article Liberalize the banking sector

Thanks to European support, as a percent of GDP the Greek burden of interest on government debt in 2014 was slightly lower than before the financial crises in 2007 and it was comparable to the one in Italy. While it may be true that fiscal consolidation has a negative effect if done in bad times, it may be recalled that in 2009 the budget deficit was around 15% and the corrected figures for the deficit have been above 4% in every year between 2001 and 2007. In such a situation, describing fiscal consolidation as something that may be easily avoided is inappropriate. Calling it austerity does neither. Moreover, it is not only fiscal consolidation that has a cost. Soft budget constraints are a potentially much larger problem. It is a sad thing that the current government tries to abandon a painful path exactly when the economy stopped shrinking, which adds a new source of negative shocks exactly when the economy has to some extent adapted to the old one.

Greece respected the 3% rule of the Stability and Growth Pact (SGP)  in 2006. its ratio of Government Debt – GDP moved from 100.3 in 1999 to 95.6 in 2007, owing to a rise in GDP, the ratio's denominator. This reduction proves that the Greek authorities did not let their finance decay. Moreover, suggesting that fiscal consolidation (a euphemism, I might add) cannot be avoided is rubbish - it is a political tool to further peripheralize those countries that suffer balance of payments constraints, and a tool to further engineer inequality between capital and labor.

http://therealnews.com/t2/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=8309

Article The Role of Institutional and Political Factors in the Europ...

Article The causes of the debt crisis in Europe and the role of regi...

Article Policy coordination, conflicting national interests and the ...

Article The Eurozone Debt Crisis. Causes and Possible Solutions. The...

One may say good things about the forward looking policies Greece, but the initially reported 2.6% deficit (which indeed was the reason for the ending of the excess deficit prodedure) had to be corrected afterwards. By the time of writing this Eurostat  has adjusted the 2006 deficit to 6.1%.

You are suggesting that deficits caused the crisis - they did not.

Article Hegemonic Currencies During the Crisis: The Dollar Versus th...

I did not talk about the cause. I talked about the fact of high budget deficits before the crisis and an exploding deficit in 2009, i.e. before "austerity" measures were taken. See e.g. Thomas Moutos & Christos Tsitsikas, 2010. "Whither Public Interest: The Case of Greece's Public Finances," FinanzArchiv: Public Finance Analysis, 66(2), 170-206 and  Georgia Kaplanoglou & Vassilis T. Rapanos, 2013, Fiscal Deficits and the Role of Fiscal Governance: The Case of Greece, Economic Analysis and Policy, 43(1), 5-27. The previous mismanagment suggested some tightening. Euro partners assisted in so far that the interest burden as a fraction of GDP now is somewhat lower than in 2007 and 2006 despite a much larger debt/GDP ratio.

You are suggesting that budget mismanagement was (is) the primary driver for the so-called tightening of the belt - this is fallacious.

Article Fiscal Policy and Rebalancing in the Euro Area: A Critique o...

Data The Political Economy of Europe's debt crisis

another source of info

https://www.youtube.com/watch?v=ySviPFwdfcM&feature=youtu.be

I strongly reccomend to read "Prospects and Policies for the Greek Economy", by Papadimitriou, Nikiforos and Zezza (Levy Economic Institute, February 2014)

Authors discuss various scenarios for restoring growth and increasing employment in the Greek economy, evaluating alternative policy options through a specially constructed macroeconometric model for Greece (LIMG). After reviewing recent events in 2013, which confirm  previous projections for an increase in the unemployment rate, they examine the likely impact of four policy options: (1) external help through Marshall Plan–type capital transfers from the European Union (EU) to the Greek government; (2) temporary suspension of interest payments on public debt and use of these resources to increase demand and employment; (3) introduction of a parallel financial system based on new government bonds, or “Geuros”; and (4) adoption of an employer-of-last-resort (ELR) program financed through this parallel financial system. Authors argue that the effectiveness of the different plans crucially depends on the price elasticity of the

Greek trade sector. Since the analysis shows that such elasticity is low, our ELR policy option seems to provide the best strategy for a recovery, having immediate effects on Greek living standards while containing the effects on foreign debt.

http://www.levyinstitute.org/pubs/sa_2_14.pdf 

David,

you seem to have a lot of research ahead of you if you do not even know that there is, of course, a Greek central bank, the Bank of Greece: http://www.bankofgreece.gr/Pages/en/default.aspx

Maybe I should phrase the basic political, legal, contractual, ethical and moral issue as a "research question":

Should any entity, be it a person, a couple, a family, a cooperative, a corporation, a community or a nation, spend more than it earns, over a foreseeable and managable time span?

If your answer is yes, then you, David, are possibly in interesting company, but you do not accept a fundamental rule of life on our common planet.

If your answer is no, then we can start to talk about solutions.

David, I understand that in your reference system "neo-liberalism" is something BAAD. But as this is a scientific research platform and not a soap box on Hyde Park Corner,  maybe we can start here:

1. What is Liberalism - how does the majority of research define it, and where do you agree resp. disagree with that definition?

2. What is "Neo-Liberalism", and how prescisely does it differ from Liberalism?

Yes it is an ethical poblem, but not exactly in the sense expressed by Peter Prischi. Capitalism cannot exist without debts: it is a monetary economy of production, Money-Commodity-Money' (where Money'>Money).

As Keynes wrote: "Planned investment—i.e. investment ex-ante—may have to secure its “financial provision” before the investment takes place; that is to say, before the corresponding saving has taken place… There has, therefore, to be a technique to bridge this gap between the time when the decision to invest is taken and the time when the correlative investment and saving actually occur. (Keynes 1937b: 246)"

Public debt is just the way in which public planned investments may be funded, and in a recession public investments do not crowd out private investments. It is true instead that they may reduce radical uncertainty in favour of private sector too. Here is the ethical problem!

What are the conditions in which public debt is sustainable? The public debt is defined as sustainable when the ratio D/Y decreases or, at least, remains constant. (Conversely it is defined as unsustainable when the ratio D/Y is increasing). It may well happen that the financial markets interpret a high (D/Y) ratio as a risk factor and impose an even higher (i-g) differential. It is by this route that a high (D/Y) ratio may contribute (even without objective reasons) to generate fragility in the public financial sector. Consequently to have a fiscal policy that curbs unemployment (also in the long run) we should have that the rate of growth (g) is higher than the rate of interest (i) and well regualetd financial markets .

See on this point http://www.siecon.org/online/wp-content/uploads/2011/11/The-Myth-or-Folly-of-the-Maastricht-Parameter.pdf

Stefano, thank you for this truly interesting and well-founded contribution!

Maybe the example of Poland could be helpful for Greek policymakers (so as not to point to the obvious references Ireland, Spain and Portugal). After the peaceful revolution and the reinstatement of democracy public policy was quite austerity-oriented (pardon my shorthand), certainly much more than other prviously communist nations. That created less mass income, more frustration, much less public debt, more leeway for public investments (instead of transfer goodies) and a much more robust economy which produces excellent mass incomes compared to whre Poland came from. No Keynes here - but I would be truly interested if you have a similarly enlightening view on this as what you contributed above!

Peter,

In order to enhance your knowledge of neoliberalism, refer to the following handbook.

Yours,

David

Book The Handbook of Neoliberalism

David,

this enhancement of my knowledge may take some time as the book is not yet written, according to the link which you gave and which I have just followed.

So what about my question?

Yours,

Peter

See this article:

Article The neoliberal theory of society

or this book:

Article Neoliberalism: a Critical Reader - Edited by Alfredo Saad-Fi...

Concerning the notion of endogenous money, which is the foundation for capitalist social relations, I reckon perusing this article as well

Article The Post-Keynesian and Institutionalist Theory of Money and Credit

The € is a great tool for already rich EU countries like Germany for exploiting weak economies like Greece, Portugal or Spain. The EU monetary system was fragile from the moment of its institution because of the criticality of the rates of exchanges adopted by its member countries under the supervision of the main forces. Those rates were not derived from any knowledgable formula but arbitrarily set to establish a millenium long competitive supremacy of Germany, the local hegemon. I suppose that Germany never anticipated that those rate differences in consequence would show up so quickly, perhaps a more diluted effect was envisaged but luck had it that the 2008 crisis quickened the process of competitive divergence to the extent maximum. Fragile systems exhibit very dramatic acceleration of worst effects. Ironically, we know what caused the fragility but we are unable to find an antifragile system which would self-organize itself into a more resilient complexity, perhaps not due to political woes but because the mending of the system is basically in the hands of the same names who created the mess. Cinically speaking, Greece owns loads of islands and no matter how sensitive the subject is, they are already eyed as a commodity by some, including Russia. If I am not mistaken the loan agreement with the IMF forbids Greece from taking a loan from any other lender. A sale of assets is not a loan, though, so who knows who bids what.          

I don't see Greece's problems as greek problems as I don't think they really are financial issues. 

Without a new regional distribution of production - perhaps in the fashion that Japan did in the east Asia - there is no solution to Euro. Whilst Germany is producing everything that Europe needs and reaching the highest export surplus of its history, the major part of the Euro Zone is struggling.

Austerity will put wages down, giving strength to the real exchange rate of the south of the Euro Zone. But how can this last? Why businessmen should invest in Greece and not in Germany anyway? Would you, if you were a productive investor, invest in Greece (Portugal, Spain...)?

The issue in Euro Zone is a real-side problem, not a financial one - the latter can be seen as one more outcome of the former issue. Without solving the huge inequality in what each Nation produces, Euro Zone will not long last.   

If you borrow from others, those others may well expect that you keep your promise of repayment. There are no good or bad creditors. The creditors are willing to help out a country or agent that requests additional finance. Greek finance minister Yanis Varoufakis said that international creditors gave Greece too much money. That may be true, but it could only be done because an irresponsible Greek government had asked for it earlier. How can we prevent that, if the democratic processes in a country do not work well enough to prevent it? Should the international community have rules that exclude a country from international capital markets? In a way, that is what the eurozone is trying to do supranationally: maximum of 3% deficit and 60% debt (relative to GDP).

So, how can Greece escape austerity measures? The question suggests that other countries want something from Greece. But, in actual fact, it is Greece that would like to receive addtional funds from the others. Why should those other countries not require policies that ensure that they see their money again some time, or, at least, do not see it going down the drain for nothing?

In my view the core problem in Greece is that there were (and still are) some corrupt clans that have been running the country for ages. Hence I agree with Syriza's idea of trying to find a way of taxing the tax-avoiding elites. That's the way they should go besides accepting the conditions set by the troika (which does not mean that one should not review each condition in order to improve it, if necessary).

Good answer, Frank, thank you!

How can one relate your common sense points, which seem both thoughtful and agreeable to me, to scientific concepts?

Dear Peter, I think you can't really. The first issue was: Should the international community have rules that exclude a country from international capital markets? You have to take a decision on whether you believe that borrowers and lenders should be free in deciding, if they want to conclude a contract.

The second issue was similarly philosophical in nature. Is there a moral obligation to help, even if you cannot see the situation improve?

The third issue is merely a fairness argument. Should the poor or the rich pay more taxes?

The Euro problem is on the origin itself: some of the countries were looking for a more expanded market  community, some for a financial and political community. It is very clear that nowadays there is not the second one and the currency itself is a problem not a solution to balance divergent economies, without political and fiscal agreements to complement the monetary actions of the BCE. 

From the Strategic point of view the future I see and forecast is pretty clear: without  reaching a more clear joint agreement  in one direction or in the other the common currency , in the long term, works like a competitive burden, not  an advantage, for the weaker countries.  

So I don't blame Germany while talking  of debt payments and policy and I don't  blame Greece if they try  to have a sort of soft bailout today. I comment only that the possibility of running succesfully a single currency is not a matter of debt repayment  only. We may reach in Europe an agreement for coping with the problem for the short period but at which price in structural terms if the temporary agreements are not complemented by the necessary fiscal and political ones?

When a structure is loaded with excessive burden  you may fail in defining the precise when, but you should  not in the key point : the how and "if " the structure falls down or not, at a certain moment:, in the future, under established technical conditions.  

The engineering sciences are telling us that the collapse point is  to be determined always in the weaker part of the structures. The problem, from the engineering point of view, could be focused then to calculate which point , where and why, is to be considered  the critical one!

The when , the collapse situation point arises, is derived by the moment in which the critical conditions are reached!

May be,  the where and when, for other reasons, is not to be considered Greece situation of today, in the short term Euro case story! The why, in the other hand , is clear in my present view: the European countries are still too different to match their individual structural needs "only" by respecting the Euro constraints policy!

Regardless,  at the moment , I have personally a very hazy picture of the possible how the collapse point might happen!

Kind regards

Alberto Camporesi

Many in the financial community don't want to acknowledge that Greece's 2001 entry into the Eurozone was facilitated by yet another Goldman Sachs scam that allowed the country to report phony deficit figures. The IMF's $40 billion has done little except to prolong the country's misery while allowing money to be siphoned out of Greece,  without producing any possibility of genuine reform or long-term stability (structural adjustment is a joke).

What we're seeing here are a bunch of lies obscured by Wall Street inspired smoke & mirrors. Here's what we're looking at right before our next economic meltdown ...

Lies: With the help of Goldman Sachs Greece lied (big time) about its debt to get into the Euro zone (2001).

Smoke & Mirrors: The Federal Reserve is funneling hundreds of billions of dollars to other countries to keep Europeans invested in Wall Street.

Lies: The Italians lied with the help of Goldman Sachs (again) were forced to pay the price (€8bn) for cooking the books in the 1990s so they could ditch the Lira and get into the Euro zone (1999).

Smoke, Then Mirrors: The European Central Bank is now run by Mario Draghi, the same guy who helped cook the Italian books in the 1990s, then went to work for Goldman Sachs, and encouraged the bailout of Cyprus.

Lies: Cyprus lied about wanting to save the economy when they were really bailing out Russian money launderers, Greece, and the stupid bankers who foolishly bought Greek bonds.

Smoke & Mirrors: U.S. financial institutions don't want to put up any real collateral to back their casino-like gambles, instead relying on borrowed assets and debt to back their bets.

So, with all due respect Frank and Peter, this is not a simple issue of irresponsible borrowers becoming responsible. It's part of a larger Ponzi scheme.  

What makes all of this so difficult to swallow is that the banks and financial institutions that created this mess are doing just fine. The primary reason is that they have figured out how to effectively draw on the public treasury (legally) of numerous nation-states when their financial schemes break down. History tells us that that we're all in trouble when we allow financial oligarchs to loot the public treasury to fix their mess.

My suggestion is that Greece follow Argentina's lead, and start repudiating what has been dumped on their laps by the world's largest financial institutions.

- Mark 

http://markmartinezshow.blogspot.com/2014/07/looming-debt-default-and-vulture.html

Even if Greece does leave the Euro, the question that remains is whether or not it will have the capacity to reach the summit of monetary sovereignty - this challenge puts David in an extremely weak position vis-a-vis Goliath.

Mark,

     I wonder if,  sometimes,  the available info, is too polarized or otherwise fractional , in non comparable figures and sources of data, giving origin to inadequate pictures.

E.g. If I consider the things from the Italian side (and knowing it from inside) I have to tell you that, the economic situation of Italy was, at a certain moment, (after 1998), the one of an apparently poor country , with the related sovereign debt,  owned mainly by Italians (most of the debt was owned by fairly rich, as internationally compared average, Italian families, also via their Bank savings).  Furthermore, must be always considered that,  the economic structure of Italy, is not comparable, vis-a vis,  with the one of Greece and Argentina.

Regardless this preliminary consideration: nowadays Italy, after some reforms requested by the EuroGroup agreement,  is becoming apparently better in terms of structural debt projections but , in my view,  the economic strength is weakening , in relative family purchase power terms.

Furthermore, we should consider how the all matter is complex,  also in "non monetary debt" international terms:

E.g. if Greece abandons the Euro will US have access to, Greece territory, military bases, or someone else will?

Is it really convenient for Germany to allow anti euro Spanish and Italian(French) parties to coalize further with Greece  Syriza or is it better to start to look for a differentiated approach taking a more flexible stance in the whole situation, and or in individual cases, like the present one? 

So far, I have found very few papers on Debt matter,  that, by numbers, are  matching facts and events on specific parts of the Euro and Debt restructuration Story.

I recomend anyhow  to take a look to Ayraud.L,Weber A." The challenge of debt reduction  during fiscal Consolidation" WP/13/67 IMF, March 2013.

If we take a look  to the Italian Debt situation today and trend reasonable forecast, we may observe that after 3 years, the pattern is following precisely the one predictable on that paper basis !

The fiscal consolidation, and debt reduction process,has an impact in  the whole economy, and It arises therefore the  basic question how  to drive the economy itself: via ratios ,  via political decisions or both?

As David comments in his post, you cannot say " no " to a country without taking in consideration their capacity of sovereignity and this is not only matter of ratios. It is linked to many implications of political importance.

Greece is forced to find an escape but also the other countries and Germany in particular,  I don't think that are now "easily" in the condition of saying NO, No, no. Too many instability factors are in the picture: Ukraine, Libya, etc.etc. and I presume that also the US Government would not be keen to have, now, the poor David launching the stone to Goliath.

Therefore I presume that one way or the other the Greece showdown on euro should  be postponed, via a lateral thinking approach (Greece and Europartners side).

If not , this would be the end of EURO, but also of NATO and the happening of the "David stone" would hurt  already unstable equilibriums (including financial ones) in the Planet:. The game is too big to leave it to  the ratios "irrationality"!

Kind regards

Alberto

I totally follow Alberto's answers. 

Surely, it is impossible to neglect the importance of the financial problem Greece has gone through - the corruption issue included. Nevertheless, if one just sees the problem of the Euro as a financial problem, he or she only views a circumstantial question, not the structural and more important one.

If we take a look into the Spanish and Irish cases, it becomes clear that the financial problem - which brings along the fiscal issue - has been a concern since 2008.

Thank you guys for the great debate. Let's keep it on.

Alberto, thanks for the thoughtful response.

First, I would agree that there is more to our market matters than economic projections. The issue of military bases, oil routes, and global stability are a factor. It is my view that we can never speak in market terms without considering the political negotiations that made the market environment ripe for commerce to develop. It is my view that the state creates the conditions under which markets prosper (and collapse).

My concern with David's original question is how nation-states - including the United States - have come to embrace debt repayment at any cost, regardless of how and who's orchestrating the debt regime. Debt repayment has become a Holy Grail of bankers, regardless of political realities that surrounded the origination and subsequent life of the debt.

Little consideration is given to reckless debt contracts that were written, and that are now supposed to be honored by nation-states, regardless of the source or terms. The larger goal, it seems, is simply to make sure that nation-states assume legal liability for debt contracts that were made and sanitized in political environments, as if Adam Smith's "invisible hand" of the market are the governing dynamics behind these market instruments.   

As for the paper you cite ... I think we should discuss (1) the importance of multiplier effects in depressed economies (which make debt targets unattainable), (2) the utility of embracing a longer and more cyclical view of debt repayment (a very good idea), and (3) how debt consolidation packages should be more "growth friendly" (another good idea). We can even apply these considerations to countries like Italy, Greece, and even Argentina.

But until we address the issue of the actual utility and validity of accumulated national debt in our current environment - where America's financial institutions can effectively dump their worst market instruments on to the Federal Reserve, while the Fed readily makes dollars available (via swaps) in Europe so Wall Street can survive to see another day - I think we're really talking about rearranging deck chairs on the Titanic (apologies for the tired cliche). Discussing multiplier effects and cyclical views in a bailed out and subsidized global economy is really just measuring how much water we're taking on, especially if we don't ask how we got to where we're at.

In my view Greece (and countries like Argentina) need to begin the process of questioning how much of our debt is actually valid or legitimate. I'm sure you've seen the debt-GDP numbers for individual European nations and the United States. Cumulatively, they're at historic highs. My question is whether we can continue on our current make believe path believing that we operate in a functioning economy - attempting to pay down debt - when the world's largest financial institutions roll over and ratchet up debt loads around the world (which benefits them and their market players), but also creates an environment that does little for middle class, other than burdening them with more debt.

I think Greece should force a debt renegotiation (which should include considerable debt forgiveness) and then offer "structural adjustment" on terms that are - as the Eyraud and Weber article suggest - "growth friendly"  and more in tune with longer economic cycles. Growth in the multipliers should follow. More importantly, you will get more political buy-in from Greece in the process.

There's more here, but let me end with this. The 2008 market collapse has made all of this worse than it should be. Policymakers around the world know - but choose to ignore - that U.S. financial institutions have become wards of the state. The Federal Reserve has dumped more than $4.3 trillion into these institutions, and there is another $13-14 trillion that's already baked into the next market meltdown (discussion attached below). This superficial recovery is one of the reasons the Dow just hit 18,000 but no one is cheering on Main Street in America. We need to stop pretending that we operate in a functioning market environment.

Greece can help us here by forcing  renegotiation on more "cyclical" terms.

Again, Alberto, thanks for the response. The article you cited offers some interesting options.

- Mark 

http://markmartinezshow.blogspot.com/2013/12/were-doomed-how-qe-eternity-is-going-to.html

It's too late for Greece to forgo the debt or start a new dracma.  Reform of their socialistic policies is the only resolution.  Yeah, painful for those who are used to freebies - just like in the US.

Kris, why too late? Should it be a (free) market economy, allow Friedman practitioners, Ulus, Zulus, Gulus and the like heartbreaking string pullers of the invisible market hands (chopped off? What a shame!) to leave it to those market forces which unpulled by fat fingers would accomodate to the imbalances. Is it a problem of  Greece alone?  I believe that you have not read Mark Anthony Martinez. Reforms, policies, interventionism, new regulations and then back to a (free) market economy. Is that what you want? It seems that the problem is not that we cannot find a solution but certain forces do not want to accept solutions, quite natural ones for a (free) market economy. The perpetrators who created this systemic instability want a bailout now. They are in a haste wanting to gain from their fragilities. They never insured themselves against big losses. Did they not know those risks before? Economics, ethics and morality. Publilius Syrus wrote that nothing can be done both hastily and safely - almost nothing. You probably think that interventionism will ensure another (how long?) period of steady prosperity devoid of setbacks, and hidden vulnerabilities and delay a next crisis until the day things crash.       

Greece is a problem because you can talk about it. CHF is not because you cannot talk about it. Remember January 15, 2015? Has anyone compiled a list of similar incidents of such magnitude? Are incidents on foreign exchange markets less attractive or are they simply ignored because they do not fit the size of your pockets? I remember the crisis of 1998, Russia went bust. I remember the crisis of Argentina. I remember all other crises of the last two decades. Poor Argentina left alone. Mark Anthony Martinez wrote an essay which does not insult anyone, I believe, but he could have used a much stronger language validated by the circumstances and the stances taken by mainstream media. Some economists are dangerously too near ignorant politicians, ill-educated journalists, lobbyists and fat fingers. Economics is too far from ethics and morality. When you hear of a plot, you probably search for who said it, not what, when you hear of a collusion, you probably search for a list of mental illnesses. When you hear of a setup, you probably think of Hollywood and return to asset-liability management models in commercial banking sector. Things always go two ways in people's minds. One way is pure science, like pure mathematics, never touching stinking empiricism. The other way is empirical. When the two things do not tally you blame the science, not the culprits. What a purgatory devoid of good faith! What I want to highlight here is that quite natural phenomena are mistaken for extraordinary ones and vice versa. Or you blame (free) markets for having done something and at the same time for not doing something which is quite schizophrenic to me, and in order to cope with the trouble you propose switching off the operating system for a few minutes, Let's reset some parameters, you do not care who sets what and why, and resume the working of (free) markets as if nothing ever had happened. In other words you propose to manipulate the system. The manipulators are certainly hired from Mars and thus are absolutely unbiased. A consensus is then reached because politicians always need to have a last word what is most appropriate for the public interest. That's the rise of shmaconomics in which firms too big to fall are being bailed out but countries seem to be immersed in quite a different space and in quite different dimensions to determine whether they are big or not too big to fall. From the angle of pure mathematics, let us forget their names and geopolitics, this must be indeed an outside the Milky Way mathematics and science. One wonders what could be the number of employees engaged in resolving the Enigma  of the Greek problem and to what an extent their proposals will have been tested on themselves, why not, to show enough credence to their implied empiricical evidence. Economy never offers a second chance, we cannot run a test and then choose. It is not a machine game. But the real warning comes not from political economics or ethics but from the theory of chaos. Quite naturally some perturbations, small or large, can expand at an exponential rate. Whatever solutions politicians and experts come up to, those must be treated as very large perturbations in the system with risks impossible to measure. This highlights the stupidity of those who tell you that they KNOW the future costs of some solutions right NOW and therefore  they will propose let's compare them or optimize them somehow. That's nonsense. Nobody can know such costs. That's the way some devilish solutions could be inserted through back door, one or the other. Anyone who says he KNOWS the consequences must be insane. 

The question that you should be asking is as follows:  When the strong (in nominal terms) advanced economies that advocate vehemently the euro-straight jacket will stop feeding a terminally ill patient (Greece)? If you manage to answer this then you should be able to explain the concept of economic growth in the context of morbid capitalism.......