After Guillermo Ortiz gave broad lessons to Europe from LatAm crisis, here is another piece of advice from Mark Weisbrot and Juan Antonio Montecino of CEPR. This time it is lessons for Argentina.
The say Greece is being forced to do a painful adjustment from the crisis. It is trying to recover via internal adjustment which only worsens the crisis. In Argentina, we also had the same thing where internal devaluation was tried which worsened prospects. It was only when Arg broke the currency board and let its currency devalue (which is external devaluation) could it come out of the crisis. And it did come out of the crisis fairly quickly unlike Greece and others which are taking many more years.
Though this story has been played earlier as well, the paper still has some interesting facts and analysis.
The authors pass the main issue with Greece going to Drachma rather casually:
On the negative side, the biggest obstacle that some have pointed out would be the fact that Greece no longer has its own currency. It would have to re-introduce the drachma. While this poses some potentially serious logistical problems, it is difficult to see that, by itself, this would make Greece different from all other countries that were faced with otherwise similar situations.
It is far more complex than this. Other countries always had their own currency which was pegged. Greece has moved to Euro in 2001 and does not have any history with Drachma for more than 10 years now. So clearly it is much more difficult as I argued here.
But then going by what is going on in Greece one clearly needs to think of other options. It is another case of recent bailout and disappointment soon thereafter.
