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"Would this work for Greece? No, unfortunately no, because Greece is not able to pay in the future the huge debt it has, so the only option is accept it, either by accepting a slightly higher inflation in the eurozone printing the money that Greece needs or by a default...or.. by having a common european tax to pay for unemployment benefits and mobility of workers in the whole euro area. In other words, to have an european economic union."

I totally disagree with this point. Even at levels of debt piled by the 2004-09 government (they double it in absolute terms in just 5 1/2 years), Greece would still be able to serve its debt if she had to pay for them a reasonable interest rate, i.e. around 3-3.5% i.e. as high as it used to pay or as high as "risk-free" Germany pays.

"Eurozone leaders have turned a 50bn Greek solvency problem into a 1,000bn existential crisis for the European Union." David Miliband

by Kostis Papadimitriou on Sun May 22nd, 2011 at 04:26:30 AM EST

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