IKN

This dated July 3rd on Bloomie (your author highlights bits and pieces):

It is the scenario few talk of: What if Greece left the euro area and its economy thrived?

The reason for the silence may be that it’s too ridiculous a concept to even consider.

As the country’s referendum on austerity nears, economists are lining up to warn that quitting the euro and defaulting on its debts would make Greece an even bigger pariah in financial markets and push it toward a deeper depression with the bankruptcies, unemployment and social unrest that entails.

Such pain, so the conventional wisdom goes, would scare the likes of Spain and Portugal into rededicating themselves to the German-branded austerity and economic reform that membership of the single currency demands. To some, a euro zone without Greece would be smaller yet possibly stronger.

But economists at Oxford Economics Ltd. and Citigroup Inc. this week gave voice to the question of what would happen if Greece dusted itself down within a couple of years and rode a falling currency back to economic growth.

That would challenge the theory that leaving the euro was economic suicide. And it could encourage other members to consider devaluation and default more appealing than life within the euro and so pose an even bigger threat to the currency bloc’s sustainability than if Greece stayed.

This dated June 28th on IKN, reprinted on Monday 29th just for fun on the open blog:

From the outside looking in (my viewpoint South of the Equator is as close to detached as they come in capitalist terms) I see Greece and Syriza playing a very big game of chicken with ECB/Troika/IMF. And Syriza is playing it well too, the snap call for a referendum is populist yes, it’s cheap yes, it’s a handing off of responsibility when the Euro exit hammer comes down yes, but it’s also a reasonably astute chessmove that must have shaken its opposites hard. You have to wonder just how much Merkel, to name but one, is prepared to gamble (because it’s now just that, it’s very very high stakes gambling) on Greece today. And I repeat, the big gamble isn’t whether Greece goes through a couple of tough years because that’s a given whatever happens in the days ahead, austerity pill or Drachma pill. The big one is whether Greece follows the pattern of Argentina and Iceland and emerges economically robust and dynamic after a modest rough seas period. Whatever course be taken, Greece does not die tomorrow, nor next week. That’s also true for the Euro tomorrow and next week. The acid test, the Euro and its potential to unravel, will be the economic progress of Greece if it’s allowed to leave the Eurozone because the second any other Southern Eurozone member starts to feel jealous of Greece‘s lot, the game is over. 

Just sayin’.