Wednesday, June 29, 2011

Czech Central Banker: Greece Needs to Restructure

The best recommendation on how to end the Greek crisis comes from Miroslav Singer, the governor of the Czech National Bank.

Europe should pick one of two tough options for Greece — either allow it to restructure while remaining part of the euro zone, or opt for Greece to leave the euro and restructure its debt in conjunction with currency devaluation, Singer correctly said in a speech to the Official Monetary and Financial Institutions Forum in London, according to Simon Kennedy for Market Watch.

“Instead of the current muddling through, one of these two ways should be chosen and clearly communicated to markets, voters and others,” Singer said.

“Otherwise, we risk further loss of credibility for everyone involved in Europe and very likely for the International Monetary Fund as well,” he added.

 Singer said it is a “myth” that the euro zone cannot survive a Greek default.

Singer went on
The upshot of the recent U-turns is that the markets are completely confused and do not see any predictable outcome to adjust to. They see no will to allow Greece to leave the euro zone and depreciate, but they also see no willingness to support the country sufficiently....

The euro zone’s mechanism has supported economic divergence rather than convergence. The rules are not only wrong, they are manifestly and idly ignored regardless of their quality. There is now no possibility of a happy end, but we should end the uncertainty.
Singer has it correct, except for the fact that the banksters will have none of it and want to be paid every penny they foolishly loaned to Greece.

1 comment:

  1. Yep, the banks T-accounts will always be positive. That is why I never pay any attention to the deflationists, because they know as well as I that the right side of the bank's ledgers will ALWAYS be up, no matter how many people have to suffer or die to make it happen. It seems that the whole of economic academia today has been skewed to this end, no cost or floor of interest is too much. If only they fully understood how their actions distort the price structure, then maybe they could fully control the world, but they cannot.

    To control the individual actions, valuations, and thoughts of men is to wish the impossible: They'll never get it, but they will certainly try. We will all pay the ultimate price.