Do lessons from Argentina apply to Greece?

This is the title of my new paper… Comments are welcome

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One Response to “Do lessons from Argentina apply to Greece?”

  1. econlearn Says:

    You are very right in saying that the economics of a country in a monetary union versus a standalone country with a pegged currency is very different. However, I am not too sure that EMU has been the savior of Greece in the truest sense. Everything said and done, it could well be argued that Greece might have managed to scrape through the international credit markets with heavy costs to raise finances had it not relegated its sovereignty to the EMU- a bit earlier than this. Germany has played a critical role in the Euro project ever since the beginning. Germany is world’s second largest exporter and 60% of its exports go to the European Union. The EMU initially masked the weakness in the Greece economy and when the productivity gap between Greece and chief economy in the EMU- Germany rose to a point of no return, all the hell broke loose. Germany has also committed the mistake of not diversifying its export basket, relying largely on the countries in the EU. Now Germany is suddenly facing the moment of truth, its exports are primarily dependent on economies which have very less or no capacity to finance them. As far as boosting domestic demand is concerned, Germany’s population is likely to shrink by up to 21% in the coming 50 years and thanks to higher life expectancy and a persistently low birth rate, every third person living in the country will be 65 or older in 2060. The point is Greece can not be blamed solely for their fate. It drifted along the flow without knowing where it is headed. The only solution now looks to be getting out of the Euro and let the buck stop somewhere.

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