Tuesday March 31, 2015 Search
Weather | Athens
14o C
09o C
News
Business
Comment
Life
Sports
Community
Survival Guide
Greek Edition
Greece should exit euro to save economy, says Ifo head

By Steven C. Johnson

Greece's ability to recover competitive economic standing will be severely constrained if it continues to use the euro, and other indebted eurozone countries will likely face similar struggles, the head of Germany's prominent Ifo economics institute said on Monday.

"I personally believe there's no chance for Greece to become competitive (while) in the eurozone,» Hans-Werner Sinn, president of Ifo, said in a luncheon speech in New York.

"If Greece is kept in the eurozone, there will be ongoing mass unemployment. But if they exit, they will see a very sudden recovery,» he said, as lower prices boost competitiveness.

He also cited risks of other indebted eurozone countries facing severe spending cuts and tax hikes.

"Cutting wages and prices to the extent necessary in some southern European countries is impossible, whatever the politicians say,» Sinn said. «Policy is unable to overcome the laws of economics."

Greece has received more than 100 billion euros in aid since its debt crisis began, and last month creditors agreed to trade their Greek bonds for lower-valued securities.

Sinn said it would have been better to use that money to help Greece manage its exit from the eurozone.

Complicating matters are the various European Central Bank lending operations that Sinn said amount to «unlimited credit» for troubled countries.

The ECB has extended more than 1 trillion euros in low-cost, low-collateral, three-year loans to eurozone banks. Some of that money has in turn been loaned to eurozone governments to help bring down rising borrowing costs.

Sinn said these operations circumvent parliaments and will eventually lead to a common European government bond that removes interest rate risk and allows countries to borrow at below-market rates rather than pay down their debt and reform their economies.

"Uniform interest rates will lead to another misallocation of capital in Europe,» Sinn said.

He said Ireland has been successful in cutting its prices and trimming debt, relative to other troubled eurozone countries, because its housing bubble began to deflate before the ECB and the European Union rolled out cheap loans and rescue programs.

"Ireland had to help itself,» he said. [Reuters]

ekathimerini.com , Tuesday April 24, 2012 (11:35)  
Hoteliers hire firm to monitor illegal tourism accommodation
Construction crumbles by 80 percent in just five years
Cosco plans for ship repair unit at Salamina
Greek bourse benchmark closes at the day’s high
Major effort under way after floods in Serres
Local authorities, residents and members of the armed forces in Serres, northern Greece, worked together on Monday in an effort to limit the damage caused by the Strymonas River, which broke...
Golden Dawn´s No 2 released, as protests over trial linger
Just weeks before the leadership and around 70 members of Golden Dawn are to go on trial, the neo-Nazi party’s second-in-command, Christos Pappas, was released from jail on Sunday as the 18-...
Inside News
SOCCER
Cyprus soccer eyes reunion after 60-year divorce
Turkish Cypriot soccer officials on Monday vowed to press ahead with attempts to reunite with the Cyprus Football Association, (CFA), triggering a political storm on the ethnically-split isl...
SOCCER
Three Greek internationals injured in Budapest car crash
Three Greek international soccer players were slightly injured on Monday in a car crash as they travelled by taxi to Budapest airport following Greece's Euro 2016 qualifying goalless draw ag...
Inside Sports
INTERVIEW
Releasing migrants from detention centers not enough, says UN rights watchdog
The Greek government's shift on immigration is “the beginning of what will no doubt be a difficult process,” according to Jan Jarab, regional representative for Europe of the High Commission...
COMMENTARY
Tsipras needs rupture with far-left, not Brussels
Does Alexis Tsipras, the Greek prime minister, have the guts to break with his far-left faction? The country’s fate hangs on the answer to this question. Greece’s immediate prospects are dic...
Inside Comment
SPONSORED LINK: FinanzNachrichten.de
SPONSORED LINK: BestPrice.gr
 RECENT NEWS
1. Cyprus soccer eyes reunion after 60-year divorce
2. Hoteliers hire firm to monitor illegal tourism accommodation
3. Construction crumbles by 80 percent in just five years
4. Cosco plans for ship repair unit at Salamina
5. Major effort under way after floods in Serres
6. Golden Dawn´s No 2 released, as protests over trial linger
more news
Today
This Week
1. ECB nerves fray on Greece as supervisors rile central bankers
2. Greek markets show all at risk should mistake trigger a default
3. Talks in Brussels continue but Greece and lenders 'not there yet'
4. Greece says not backing down on debt relief goal
5. Work on tram extension begins in Piraeus
6. European stock-index futures rise as investors look to Greece
Today
This Week
1. Next Monday is D-Day for state funds
2. Eurogroup unlikely to be held soon to discuss Greek reforms
3. Moscow expects progress from Tsipras visit
4. Some more equal than others
5. Greece to present reforms by Monday, says gov't spokesman [Update]
6. Greece optimistic on deal with euro area next week
   Find us ...
  ... on
Twitter
     ... on Facebook   
About us  |  Subscriptions  |  Advertising  |  Contact us  |  Athens Plus  |  RSS  |   
Copyright © 2015, H KAΘHMEPINH All Rights Reserved.