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What would you prescribe as "progressive" policy in the case of Greece now?

  • Impose confiscatory capital controls to prevent asset stripping.

  • Strategic default on particularly odious debts. This includes all debt assumed in the course of bank bailouts.

  • Kill a bank or two; if the capital markets turn on the sovereign, the sovereign kills them - that's a good principle and it needs to be reasserted with some vigour.

  • A credible threat to leave the € if the inflation target is not raised for the core members to permit the periphery to engage in "internal devaluation" without having to push their economy into a deflationary spiral.

  • Inform all remaining creditors that the first and final duty of the Greek sovereign is towards the Greek people - there will be no dismantling of the Greek social model, so if the creditors want their money back, they can damn well help figure out a way to make that model work.

  • Tell the IMF to fuck off, and send a delegation to Moscow. Influence in the Aegean region has been a Russian geopolitical objective for the last three hundred years, so you have chips to bargain with if you play them right.

That's the foreign policy bit. As for how to deal with the entrenched corruption and regulatory capture... well, our own track record is less than spotless, to put it mildly. But we promise to let you know if we figure it out.

How does the current turn towards pan-european austerity affect things in Greece if at all?

It means that you're screwed.

Would a significant depreciation of the Euro help Greece and the South create trade surpluses and export themselves out of big deficits?

No. Your trade imbalance is with the core €-zone members, not with economies outside the €-zone.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri May 14th, 2010 at 07:07:44 PM EST
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