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For our 200th post this is a must read December 22, 2011

Posted by proeconomia in Fiscal policy, Main, Monetary policy, News on Greece, On the crisis, Opinion.
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Here is the link from Bloomberg. From John Cochrane @ U of Chicago. Sets the record straight on the euro/drachma issues and puts things in the perspective of the current realities. Highly recommended! An excerpt, dedicated to all the euro-bashers:

 

“Leaving the euro would also be a disaster for Greece, Italy and the others. Reverting to national currencies in a debt crisis means expropriating savings, commerce-destroying capital controls, spiraling inflation and growth-killing isolation. And getting out won’t help these countries avoid default, because their debt promises euros, not drachmas or lira. Defenders think that devaluing would fool workers into a bout of “competitiveness,” as if people wouldn’t realize they were being paid in Monopoly money. If devaluing the currency made countries competitive, Zimbabwe would be the richest country on Earth. No Chicago voter would want the governor of Illinois to be able to devalue his way out of his state’s budget and economic troubles. Why do economists think Greek politicians are so much wiser?”

 

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1. ECB’s Honohan Says Greece Euro Exit Can Be Managed « Proeconomia - May 13, 2012

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