Monday, January 12, 2015

Why Should Greece Need to Leave the Euro?

When Detroit defaulted (for the second time the past hundred years), it did not start trading its own currency.  Detroit still uses the dollar (as does Stockton, California and other cities that have declared bankruptcy).  So why does Greece need to leave the Euro?  What is the great virtue of having your own currency?

What Greece (and Spain and Italy and France) needs (need) is a "workout."  They need to default on some or all of their government debt.  Then start anew.  There is no reason, at all, to even consider reintroducing the Drachma or any other currency.  It is absolutely absurd for Greece to leave the Eurozone simply because it is defaulting on its government debt.

The single currency union is a good idea, not a bad idea.  Stupid levels of debt is a bad idea, but why throw a way a good idea simply because politicians cannot control themselves. 

Is Illinois going to start trading an Illinois dollar when the inevitable -- an Illinois default of state obligations -- occurs?

No comments: