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Assorted Links on Greece

July 6, 2015

1. Greece rejects the bailout terms.

Probably on the whole good news, but as with anything, there are good aspects of this and bad aspects. Greece needs to reform. They need to balance their budget and reduce the amount of corruption. Voting yes would have helped them do that. However, they also need to default and get a clean start.

2. Yanis Varoufakis has stepped down as finance minister. He doesn’t seem too bothered.

3. Interview by Die Zeit with Piketty. I don’t like Piketty much, but this interview is fan-f’n-tastic. Nearly every line is quotable. The German culture surrounding debt is really terrible and it’s fun to see someone call them out.

4. Switching currencies would be hard. If Greece leaves the Euro, the natural question is “who is next”?, with possible answers of Italy, Spain, or Portugal. If any of those leave, the pressure on the remaining countries will increase. Without southern Europe the whole currency devaluation and unified market justification reasons for the Euro will be gone. What is the point if it’s just going to be Belgium, France, and Germany still in?

The Euro is not even close to being the optimal currency zone. The ECB have shown themselves to be completely inept. I see no reason why defaulting should result in leaving a currency zone per se. In the U.S., States and municipalities can default without leaving the dollar. Why not Europe? Should the Euro exist? Probably no. Should now be the time for Greece to leave? Also no. It would create too much chaos. Changing currencies should be done with careful planning and fairly long transitional periods. The U.K. is looking pretty darn prescient these days.greek debt copared

6. Scott Sumner comments.

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