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Get the Hellas out of here February 10, 2012

Posted by proeconomia in Fiscal policy, Main, Monetary policy, News on Greece, On the crisis, Opinion.
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From the Economist, about leaving the eurozone. Read the whole piece, Here is the gist: “For Greece, on the other hand, departure is unlikely to work out well. A devaluation would make Greek exports more competitive, but in the short term the chaos of a departure would likely reduce or eliminate entirely the benefit of a cheaper currency to Greece’s top export industry—tourism. The new Greek currency would likely overshoot on the way down, and given the country’s fiscal difficulties rapid inflation, and perhaps hyperinflation, would loom as a threat. In all likelihood, Greek money and labour would flee the country in droves, potentially forcing the country to adopt tight capital and border controls. The country might well wind up a failed state, a political and economic wreck.”

 

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