Solutions to the Greece crisis -Polemics-

For the past couple of days, I've been discussing the Greecian economic crisis and what possible solutions can be put in place. It is obvious why this was a topic of conversation as it is the 'main issue' of the world.


So I've decided to put my two cents in the situation, here goes:


Solution one:


The first solution I encountered was one by the magazine, "The Economist", wherein:

• Greece, instead of defaulting, should just restructure its loans
• Greece owes 160% of its GDP. If we decreased the amount that Greece owes to 80% (with financing from France and Germany) then systematic risk will be decreased.
• Also, the world economy will not collapse and die and we will all not lose that much money.

Okay so here's the thing with this solution. Restructuring the debt does not solve the problem. It just allows more time to solve the issue. So is this a solution? Not really. Can it be useful? Totally. Is it worth it? Maybe.


Solution Two:


The second solution was one I encountered in "The Financial Times":

• Greece does not have to default at all
• Get rid of systematic risk by having Greece pay in long-term payment plans.
• Finance debt with loans from France and Germany. Pay them back with interest and in accordance to their regulations.

I ranted about this one in a conversation in facebook:

I just think this is a good plan... in the eyes of everyone else other than Greece. By restructuring their debts into a long term one WITH interest rates. If Greece finances their debts utilizing the terms of France and Germany.... A) Both F and G will be looking to make profit B) Greece will never be a 'free' country again.


For B), think about it as if it were an interaction between the IMF/World Bank and Indonesia. Indonesia had debt. A lot of it too. Specifically, to America and a bunch of other developed nations who helped kick out the Japanese and Dutch way back when. So to help finance those debts they looked for a loan from the IMF/WB, which they got. So they paid back those debts etc.... and then we got fucked over because we had to make long term payments to IMF and WB for the loan we took from them. So even if we are more prosperous now (and we have a high abundance of resources, including oil, but people forget that) we have to use all of that money made to pay back the IMF/WB (as per their terms).

So in conclusion, if Greece followed that plan.... Yes the systematic risk would be overturned, yes the world will not end, and America would be the focus of the debt again. But Greece will have a shitty shitty life from that point on.

So yeah, that's what I thought of it.


Solution 3:

This is not really a solution... more like a possible scenario.

• France and Germany invest in Greece
• Greece fucks up and defaults anyway
• Everyone loses money and we cry in fetal positions under our desks.

Obviously if this were to happen then everyone fucked up and they are idiots. But then again, at least the problem is over right???? (We have more problems but oh well, at least that one is dealt with).

Solution 4:

I saw this one in the Economist as well:

• Greece does not default
• Changes currency back to drachma
• Systematic risk depleted (but not entirely)

Well... this could work. But I use this quite lightly. Mainly because I think that if Greece were to change back to Drachma, the currency would be too volatile and the debt would increase rather than decrease. Although it could be argued that Greece can have better control of it's debt that way. Also the Eurozone will be saved from demolishment.

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All in all, we're fucked wherever we go with this.