Wheels Off the Greek/EU Deal

The back-and-forth over whether Greece (1) wants to stay in the Eurozone, or (2) if it doesn't, whether it will be able to leave, and (3) if it does, whether it will be able to stay, continues, and indeed intensifies.

Back in April I wrote here:

The problem seems to be that there is no 'clean' way for Greece to leave the Eurozone. Bringing back the drachma would require at the least an extremely complicated period of transition, one with which the rest of Europe would have no incentive to co-operate.

So the Eurozone is like the roach motel of yore. Roaches check in, but they can't check out.

Yet there is no a priori reason to believe that the single monetary policy maintained by the European Central Bank and related authorities is best for all the countries involved. So one might naturally hope that thought will be given to an orderly exit mechanism.

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I still believe that statement, though brief and simplistic, is roughly speaking a sound one.

Part of what is new is additional evidence since late April that Greece does want to exit, insofar as one can speak of a collective entity such as a nation state 'wanting' anything.

Another bit of news is the existence of a Plan B that a small team of Greeks working for the finance department were writing even as I was writing those words, a blueprint for a re-creation of the old drachma.

Former finance minister Yanis Varoufakis admitted the existence of "Plan B," soon after he departed from that post early last month. The admission came in a supposedly confidential (but recorded) interview. Of course, such confidences do have a way of leaking out, and the world started reading transcripts of Varoufakis' statements on Sunday, July 26th. The immediate reflex of much of Greek's officialdom was to deny the truth of these statements, in effect to call Varoufakis a liar.

Things have gone beyond that, though.

Click here: Tsipras defends Varoufakis.

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