Saturday, May 26, 2012

A Blueprint for Greek Economic Future

A Blueprint for Greek Economic Future

1. In the coming second Greek elections, people have to VOTE AGAINST MORE OF THE SAME.

2. Current policies have totally failed, they have only enabled the elites to transfer money out of Greece.

3. It is the Rational Expectation that eventually Greece will have to exit the Euro that is causing Capital Outflows from Greece in unprecedent historic proportions. This Capital is never going to flow back into Greece until such time as Greece Exits the Euro and returns to a different currency either Drachma or an alternative name for a new currency.

4. Despite many Greek concerns, exiting the Euro WILL NOT automatically banish Greece from the EU, far from it. In actual fact a Greek exit from the Euro would in fact potentially strengthen EU relations as it is the current economic tensions brought about by the currency unification that does not allow a currency devaluation as a quick and efficient method of restoring economic competitiveness that is causing the current European tensions.

5. On a Greek Euro Exit, The So Called "FIREWALLS" should only be used to ensure that current business contracts priced in Euro's allow for the currency adjustment, aiding a smooth transition.
6. It is naive for Greek politicians to claim Greece can't leave the Euro, they must leave the Euro and default to restore prosperity.

7. Despite the fear of massive inflation in Greece on a Greek exit of the Euro, I would suggest as happened in 2008, there would be such a massive and quick unwinding of speculative commodities contracts as the financial system realizes the game is up that Crude Oil contracts would fall very heavily . We have already seen Crude drop from well over $100 Dollars to near $90 Dollars in the past few weeks. On the world markets this would still enable Greece to buy commodities on the open market in relative terms to what they are currently paying. Such a scenario would counter any new Drachma that may also halve in value. Once a new Drachma is introduced if the velocity of money takes hold with people quickly circulating the money to pay for items using the new currency there will not be a need to print endless amounts of money.

8. While the initial value of new Greek Drachma currency will inevitably fall exceptionally heavily, as Capital inflows back into Greece take hold, the new currency will stabalize and will actually begin to rise as investors want to be part of a Greek Economic reconstruction. The stabalizing of the new currency and the Capital Inflows of capital that has fled Greece in the past well over 2 years now, will significantly reduce the need for Greece to print money and Inflation will not be as rampant as the many scare mongers of a Greek exit may claim

9. In any Greek economic restoration "Social Enterprise" should form the back-bone of the new economy, allowing for all people to be involved and not just the few who may attempt to buy up assets on the cheap.
10. Banks and the IMF should not be proteceted this time. If they go bust, let them go bust, protecting savings deposits only. There will be cries and the IMF continues to scare the Greek people into accepting austerity as the only way simply because they know and we all know the game is up all Sovereign Debt is basically worthless.
11 The quicker the world is re-set with a debt amnesty and quick write-downs of that debt the quicker the economy will prosper again. This time around citizens across the world have to join forces and simply refuse Bailouts of the Banking system.

Whatever the eventual Political outcome on the 17 June for Greece, the world is praying for all the Greek people, that this will be the turning point and the powers that be implement an economic program that allows Greece to Default and Exit the Euro, as this is the only path for an economic recovery. This will also apply to all countres to quickly default and let the banks take the pain this time. Spain keeps trying to keep the banks in business, but let them fail this time. By letting Banks go bust it will also end the Bonus culture that has helped create the situation where Banks have become so highly leveraged. 
Toby Chambers
Economist and Social Entrepreneur.

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