RAPID RESPONSES
Greek insolvency
[Re: Eurozone crisis moves ever closer as Greek left gains ground, Friday]
I’m not sure you can blame the Greeks for borrowing vast sums on the assumption that they had the same credit worthiness as Germany. The financial system was at fault. Having said that, the point that Greeks now have to reduce their living standards is of course right. Insolvency is not new. The results have been the same since lending first began. The lender loses money and the borrower has to immediately cease borrowing and live within his or her means. Sadly, readopting the drachma will likely not make any difference in this regard. There’s no instant credibilty gain to be had from leaving the euro.
Peter Kralj
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Belgium’s burden
[Re: Europe’s shared currency shouldn’t entail Germany bankrolling a debt union, Wedensday]
I couldn’t agree more with Jamie Whyte’s assessment. Another example could’ve been Belgium. A currency union is why there are so many divisions between the Flemish and the Walloons. Flanders has long operated under strict budget management, with a highly competitive economy. Wallonia is more like Greece or Portugal. The result is that Flanders has subsidised Wallonia. It’s one of the reasons why break-up of Belgium could happen. This is a useful comparison to make because, although break-up sounds virtuous, any division would have broader consequences than simple economics. Belgium still survives.
Lode Vermeersch