For Greece, backing out of the euro — and defaulting on debts both public and private that were denominated in euros — could shut access to foreign bank loans for years, cause difficulty with imports and perhaps put a quick end to the creature comforts that came with the boom that the euro sparked, economists say.
Nor do the strong euro partners such as Germany want Greece to drop the currency, since the economic conflagration it could set off would hit them, too.
“It’s like a very bad marriage where you stay together for the sake of the kids,” said Takis Michas, a journalist at the national daily newspaper Eleftherotypia. “Greece should have never entered the euro. But leaving the euro, at this stage . . . that’s bye-bye for Greece in the world economic system.”
Many Greeks remember the not-so-distant boom years with fondness, as banks that suddenly treated their government as a low credit risk similar to rock-solid Germany lined up to lend money at low interest rates. That fueled a construction boom, access to luxury goods and many more of the better-paying public-sector jobs that the government created to bring down unemployment.
“If we went off the euro, there would be a lot of hunger,” said Kristina Patsalou, 29, who works at a cellphone store. Adopting the euro “helped a lot,” raising the standard of living, she said.
But to Patsalou’s colleague, the choice now seems stark: “Having a strong currency but living like an animal. Or having a currency that is weak and living like a person,” said Konstantinia Gogou, 30. She said she wanted her country to stay on the euro, but she found the austerity measures deeply painful.
One advantage of the euro was supposed to be that goods and services could move more freely throughout Europe, without the uncertainties of floating exchange rates and investments that can disappear if a country prints so much money that its currency becomes worthless.
In practice, the euro, now shared by 17 countries, did foster integration. But it also strained economies that continued to move at different speeds — like 17 drivers trying to work the same accelerator. What made sense for an industrial export economy such as Germany didn’t work as well for the weaker economies of southern Europe, and the European Union never adopted policies to help balance that out.
When a country has its own currency, it can print more money to make its exports cheaper, helping to spark an economic revival. That helped Iceland when it ran into trouble in 2008.
Loading...
Comments