Thursday October 2, 2014 Search
Weather | Athens
27o C
19o 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)  
Moscovici in charge of budgets seen prompting EU deficits debate
European stocks decline as investors await ECB policy meeting
Attica Bank said to have rejected notable offers
PMI index slides anew in September
Pensioners stage rally in central Athens
Parts of central Athens were closed to traffic on Thursday morning as dozens of pensioners staged a rally on Vassilissis Sophias Avenue. The pensioners were protesting against the government...
Piraeus bus routes altered due to metro station works
Bus routes in Piraeus were expected to be altered beginning on Friday due to works carried out at the city's metro station, it was announced Thursday. For more information on the upcoming bu...
Inside News
SOCCER
Rosenberg punishes Olympiakoss errors at Malmoe
A disappointing Olympiakos got the worst possible result from its clash with Malmoe in Sweden for the Champions League, going down 2-0 on Wednesday due to its own defensive errors and attack...
SOCCER
All team sports suspended next weekend in memory of dead fan
The government announced on Monday the suspension of all team sports events in Greece scheduled for next weekend, October 4 and 5, in the memory of the Ethnikos Piraeus fan who died a few ho...
Inside Sports
COMMENTARY
Theres money, still
The decision reached by Prime Minister Antonis Samaras and his deputy, Evangelos Venizelos, to seek a vote of confidence in Parliament on October 6, is a final attempt to restore order in th...
EDITORIAL
Confidence and corrections
The government must secure a vote of confidence in Parliament. Any other development would see the country enter very turbulent waters. Prime Minister Antonis Samaras and his cabinet must ag...
Inside Comment
SPONSORED LINK: FinanzNachrichten.de
SPONSORED LINK: BestPrice.gr
RECENT NEWS
1. Pensioners stage rally in central Athens
2. Piraeus bus routes altered due to metro station works
3. Moscovici in charge of budgets seen prompting EU deficits debate
4. Air travel to run smoothly after air traffic controllers weekend strike deemed illegal
5. Doctors, medical employees strike over staff shortages, wages
6. European stocks decline as investors await ECB policy meeting
more news
Today
This Week
1. Doctors, medical employees strike over staff shortages, wages
2. Court to hear Kasidiriaris-Kanelli case
3. European stocks decline as investors await ECB policy meeting
4. Air travel to run smoothly after air traffic controllers' weekend strike deemed illegal
5. Moscovici in charge of budgets seen prompting EU deficits debate
6. Piraeus bus routes altered due to metro station works
Today
This Week
1. Greece may opt for unusual president to avoid snap polls, Venizelos says
2. Woman allegedly buried alive by accident in northern Greece
3. Salaries in Greece continue to slide, dipping 1.4 pct in Q2
4. Should you bet with Kissinger on where the world is heading?
5. Cypriots divided by 1974 war seek Shariah hub
6. The shocking thought of euro-dollar parity
Find us ...
... on
Twitter
... on Facebook
About us  |  Subscriptions  |  Advertising  |  Contact us  |  Athens Plus  |  RSS  |   
Copyright 2014, H KAΘHMEPINH All Rights Reserved.