Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
Thanks Jake, for your time and your thoughts. A few issues:

  • Greece is not a net exporter of food. It has an agricultural trade deficit, and is spending 2.6 billion euros as of last year, to import food and livestock. This includes most types of meat and milk.

  • Define essential imports: does, say, machinery required for various kinds of industries that produce export goods, or basic necessities, count?

  • "Devaluation does cause increased inflation, but as long as the economy's import quota is below 1, this increase eventually converges": Expand on this, it is unclear (to me) what you are saying...

  • "a total conversion to Drachma will actually repatriate wealth": Eh? How's that? I have 10 million in euros stashed somewhere in Greece (or deposited in a Greek bank), a radical government is elected and switches overnight to a new currency, say the drachma. Initially 1 Euro will buy you 1 drachma but in a week's time, you can bet that the legal exchange rate will be something like, say, 2 drachmas to a Euro - and wages and prices will be devalued with respect to Euros, so I increase my buying power in Greece when and if I decide to repatriate my foreign deposits...

  • Capital controls: aren't those a no-no in the EU? Mind you that net EU funding for Greece was in 2009 a bit over 1% of GDP, so those funds could be suspended while waiting for a court decision on the matter...

The road of excess leads to the palace of wisdom - William Blake
by talos (mihalis at gmail dot com) on Tue Apr 5th, 2011 at 07:58:02 PM EST
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