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GreekReporter.comEuropeTop German Economist Suggests Greece Leave the Euro

Top German Economist Suggests Greece Leave the Euro

In his interview to the German Spiegel, Mr. Hans-Werner Sinn, top German economist and president of the Institute for Economic Research (IFO) of the leading German think tank in Munich, said that Greece will not be rescued from the crisis as long as it remains under the euro.

According to Mr. Sinn, Greek wages and prices are far too high for the country to become competitive within the Eurozone and the bailout plan will just freeze the current situation until it escalates further.

The economist suggested that Greece must leave the euro in its own best interest. For this to happen, the Greek banks would have to shut down for a week and then all accounts, government bonds and balances be converted into drachma. Even if this plan seems chaotic at first, the German expert believes that “the sun will eventually shine”, because liquidity can only emerge after Greece reestablishes its competitiveness.

Should Greece return to its former currency, a 44% devaluation would get the Greek products selling once again and tourists coming back, says Mr. Sinn. In this way, foreign banks and governments would not face bigger losses than they already have with the latest haircut and Greece would be given the chance of getting back on its feet and stop depending on others.

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