Bloomberg commentary says: “Greece Should Just Quit”

From Bloomberg, Jul 13, 2015, 5:05:00 PM

” Does Greece belong in the euro area?”

This fundamental question has divided Europe’s governments for months, and still does. The deal just announced only pretends to resolve their disagreement. That’s why it won’t work asserts Bloomberg editors.

To read the entire commentary log onto the Bloomberg site.

I happen to agree with the editors. The entire Greece invitation to originally join the Union and the subsidization of that entrance so far by the Euro organizations is now what we economists call a very large “sunk cost”.

Does Europe really want to throw more money at Greece with a poor expectation of a return?

Why not simply write the debt down to a reasonable level that might some day be paid back by future Greeks? Give then some foreign aid to kick start their own Greek currency and wish them well!

Then — Instead of paying Brussels massive interest payments “forever”, Greece’s leaders can take the lowered debut structure and use the avoided interest payments to begin rebuilding the Greek economy. What a novel idea.

Sort of like America helping Europe rebuild after WW-2 rather than trying to milk the defeated and her war time allies for war reparations. —–

Here is selected text from the Bloomberg published commentary. The terms forced on Prime Minister Alexis Tsipras last weekend have little chance of being accepted, carried out and sustained by this Greek government or its successors. Greece’s parliament may accept them this week because it thinks the alternative is worse — and in the short term, that may be true. In the long term, a deal imposed under extreme duress, and bitterly resented by most Greeks, won’t happen.

Greece is being forced into a deal it will resent for years, and to which it will feel no sense of obligation. Under these circumstances, leaving is the best available choice.

The current approach reached on Sunday makes it theoretically possible for Greece to remain in the euro system, but practically extremely difficult. The terms are so severe that they might well be beyond Tsipras’s power to deliver. Whatever happens in the next few weeks, Greece may still end up leaving the euro system. Exit now will be painful, to be sure. The risks to the rest of Europe aren’t small. But following an exit, Greece will at least be in command of its own future, with nobody else to blame for its setbacks.

The sooner that happens, the better say Bloomberg’s editors.

Tough assertion. Bravo!

To contact the senior editor responsible for Bloomberg View’s editorials: write David Shipley at davidshipley@bloomberg.net.

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