Germans have the solution to Greek Debt crisis: temporary return to Drachma and unconditional debt relief. The idea comes from Austrian economist Gabriel Felbermayr, Director of Foreign Economy Department at conservative think-tank Ifo (Institute for Economic Research) is a Munich-based research institution and one of Germany’s largest economic think-tanks.
In an interview to Athens News Agency, Felbermayr argued that the main problem of Greece is to increase productivity. He also underlined the need to reform the labor market.
He said that the current situation is the result of the erroneous decision of 2010 and questioned Greece’s decision to remain in the eurozone.
“It might be better for all – for lenders, even for German banks and for Greece – to withdraw from the eurozone, and this should be combined with a complete debt relief, like in Argentina,” Felbermayr stressed.
He added that Greece needs a truly sustainable model, which includes a return to the national currency, a debt relief and a development program. “In Ireland, where there were no acute political conflicts, this was based on broader political consensus” he said.
In his view, the result would not be devastating, because immediately after [the Grexit], an assistance program would ensure that “no chaos will prevail due to mass unemployment and lack of medicines. […] then there would be opportunity to create a new vision for Greece’s return to the eurozone.” (full interview in Greek here)
Do I hear German Finance Minister Wolfgang Schaeuble speaking here through Felbermayr’s lips? Yes, I do.
During the negotiations between Greece and the European Lenders in 2015, it was Schaeuble’s idea to come up with a “5-year Grexit plan“ that included also a ‘development program‘ in form of a 50 billion loan. I cannot recall though that it included also an unconditional debt relief. This additional ‘reward’ might be the cheese to lure the mouse in Schaeuble’s trap and furthermore set the agenda of the debt relief discussion – whenever it may will start.
It is certainly of extraordinary interest to read such a proposal by an economic institute whose previous president Hans-Werner Sinn was zealously supporting Grexit ever since 2010. Also worth noting is that at some point Sinn was proposing “Grexit and 30% Debt haircut.”
Apparently due to the debt deadlock and the austerity measures stalemate, now conservative Germany offers a new deal: 100% haircut.
What a coincidence that also Schaueble said some two weeks ago that “Greece needs to increase productivity and competitiveness and reforms in the labor market.
PS I’d dare say that Felbermayr did some copy-paste from a secret Schaeuble speech.
That would be perfect for Greece. Debt reset, and can start from Zero under its own currency and an ‘aid’ programme for imports”””
German economists are generally not to be trusted, and specifically not in the case of the eurozone. If they were any good, they would have protested about the seriously flawed design of the eurozone at the outset. They are all opportunistic money-grabbers, willing to sell their grandmothers for a large federal research grant.
and they hire only students as interns
Yes that’s why Germany is Europe’s most successful economy. Because they are stupid ! This time xenos, even you have out done yourself with your left wing propaganda !
You must be remarkably dumb, if you think that economies are shaped by professional economists. Economies are made by a mix of natural resources, human resources and access to capital. The German economy, which was in poor shape in the 1990s, did not suddenly improve its mix of assets: it cut salaries and pensions, to balance budgets; acquired East German industry on the cheap while certain people like the pig in the wheelchair benefited financially from such deals; and most importantly of all constructed a eurozone to cheapen the DM and export to the world and also southern Europe with lower prices. This was not honest economic management: it was political crookery, especially as they bribed Greeks and others to bring them into the eurozone quickly.
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Next time you post, try using some facts instead of posting Nazi propaganda.
Well said Guest(xenos)!
The last thing we need is empty Nazi propaganda, coming from “famous economists” and targeting gullible, ignoramuses of the likes of you Syrizee.
My dear Xenos. I think you”re being baited by our fascist friends Syrizee (rhymes with squeegee) here and Schlomo (rhymes with Dumbo) elsewhere. I would ignore them. As a matter of policy, I hardly ever feed the trolls.
Tintin: probably you are correct. But don’t forget that when we don’t reply to this sort of propaganda, there are some people who are fooled by it — particularly those who are not very well informed on the topic, such as people living outside Greece who come to this site precisely in order to be informed.
No Greek wants this Care-bombs and this bullshit he can’t guarantee anyway as nobody knows how long their capitalistic bastard system will keep going, with Germoney alone losing the next years 20 million jobs to robots and drones in their brave new world – how funny it is that only a communist revolution can save capitalism from this as its lackeys will never force the rich to pay robot-tax and pensions for destroyed jobs.
Anyway this people and esp Sinn need Greece only to play Domino to get their own national currencies back they’d sacrificed for their “Wiedervereiterung”, as this was the price they had to pay for the Nazi-collaborator Mitterand’s OK to it.
so what do ‘greeks’ want then?
remain in the euro at all cost? because that is what it seems to me…most everyone seems to be drinking the coolaid…again!
The power it needs for leaving is better invested into leaving the money-system aka capitalism in general and 1st of all stop all exports of food. If everybody is poor a money-system is senseless, it’s only needed for the rich.
you are describing what ‘should’ be happening…
but my question is…
how can the voting population of greece be so dense?
not that people are not dense in almost every part of the world!
I think they are not dense, counting in the party of non-voters Tsipras was elected by only 19%.
The focus should be on the people who don’t like to get fooled in this stupid game to vote ones own slaughterers and say “Cheers master, Thank you for democracy!” and who were fighting against the measures for years and then we’ll see that it was a big mistake to have general-strikes to be announced and play only 24 or 48 hrs, as this is just protest and not resistance.
But the main mistake is always reaction instead of action, to only fight back without creating perspective and if one looks back in history of social movements one can figure that even the big squatter-movements of the early eighties in Amsterdam, Berlin and Zurich had only the power to be strong for 1, 2 years – the rest was extinguished with repression and cheap smack from the cops for the hoods.
In the end we can see that the occupy-movement, “Arabian Spring” in Cairo and even the Maidan would never had evolved without the videos from Greece, somehow it was stolen away and cleared from its radical and revolutionary content and this is exactly how capitalism always worked – also in (Eastern) Germoney were is not only a huge amount of racist attacks but also hundreds of local politicians get attacked.
All of this perspective was already existing but most times only on a small level inside the revolutionary movements, it is still there and influences society and is influenced the other way round like “Wasn’t it a bit lame to occupy only 2 factories instead of 200?” “Examples!”
So may be its better to let the enemy think only of the voter, he can’t see his doomsday’s coming
This is no surprise to people who have followed developments since this crisis has started.It should have been applied at the outset by either returning to the Drachma or by declaring insolvency by GAP.
The former possibility is still open but as an economist has said,it will be a calamity(an event that causes great harm and suffering-merriam-webster.com) in the first few months.Unfortunately though,the state and the public are much weaker now than they were in 2010 to withstand the sock.
Well, a return to the Drachme, defaulting on its debt and access to money markets (although the latter would not happen) back in 2011/12 would have been a better option than what Greece has now (debt slaves until 2059 and a fire sale of Greek assets).
But what is best for Europe is not a Grexit but a Gerxit: Germany going back to the D-Mark. That would put the D-Mark at a REAL value against the Dollar and not the low German Euro value that Germany enjoys now and that put the rest of Europe at a disadvantage.
The Germans will never give up this ‘golden goose’ of a devalued currency that allows them to export and clean up. A more accurate value for the German Euro would be twice the rate v the dollar it has now. For Greece it is the opposite. Greece has a vastly overvalued currency and no way out. She is trapped in a depression that is worse than the Great Depression of the 1930s and we all know where that led in some countries.
KTG- I would offer that Felbermayr is in no way mouthing Wolfie’s desires. Wolfie wanted Greece out of the Euro for five years, but with no significant debt reduction. Trying to retire debt with a devalued currency would have been a farce, and Wolfie knew that. Wolfie’s objectives were, and remain, punitive, not reconstructive. Once his precious German banks were relieved of their risky holdings, Wolfie no longer cared about Greece, no less anyone else. Now the whole world, via the IMF, carries a share the risks the German banks so foolishly took on. And, the German banks turned a nice profit in this risk shifting exercise.
What Felbermayr has proposed is a default, something that should have happened in 2010. Unfortunately, Greece is not as “healthy” as it was in 2010, at least in terms of managing the consequences of a default. Wolfie doesn’t want a default for a variety of reasons, none of which are economically sound, at least for Greece. But then, Wolfie is a politician, not an economist.
with exception of default Felbermayr’s proposal is 1:1 with Schaeuble.
I would have to disagree. Wolfie wants domination, wants a country of his own to play with and enslave, wants the land empty and for free. Then he can have his factories, his slave labour with third world immigrants and his luxury hotels for his peers. Then he can expand in the European south. That is what Wolfie wants. The debt is his tool to achieve it. The only thing he dreads is Greece ever getting a patriotic government who mobilises people into defending the country from Nazi vultures like him at all cost.
IT IS MY IDEA FIRST .. not Gabriel Felbermayr.
I said that Greece should
a) leave the EU
b) re-introduce the Drachma as the means of exchange of Greece
c) and .. still use the Euro
d) therefore Greece would have 2 currencies
e) the Drachma would be exclusively under the control of Greece
f) then all that was left to do was to declare Insolvency & Bankruptcy .. which in effect would be telling the GREEDY THIEVES OF THE EU to get stuffed.
The Greeks Are Excellent Martyr’s .. bravisimo !
Cheaper it’d be to surrender to Cypriot army when it lands in Attica – all debts gone in a Greece occupied by “Great Cyprus” after the great Cypriot-Greek war declared for treasor