Saturday, May 26, 2012

Back to the drachma?

This piece (from Bloomberg Businessweek) makes some good points about the problems which a return to the drachma would cause for the Greek economy - including exporters. For example, the price of imported components and raw materials upon which many exports depend would soar. On the other hand, agriculture and tourism would benefit.

What stood out in the article for me was not so much the analysis as a reported remark by a disgruntled German guest (it would have to be a German, wouldn't it?) to an Athens hotel worker: "You don't have an economy, government, or money, but you're charging me €4 for a coffee."


  1. Word on the street is that depending on the election results, they will leave the Eurozone on the 18th of June.

    Good news for the dollar though, amirite?!

    One mans pain is another mans pleasure as they say.

    1. Who knows what's going to happen? Devaluation and holiday paradise? Devaluation and social unrest? Sticking with the bailout plan?

      But the big question is how all this is going to impact on the rest of Europe.

    2. Th Euro was a great concept, but at the end of the day it was not so much putting all their eggs in the same basket as it was putting all their apples in the same basket. As we know, how many bad apples does it take to ruin the whole bunch? At least is the saying, just one, realistically, with regard to the European apples, it's probably going to take a few of them.

      I don't think Greece will be the death knell, but my prediction is a further weakened Euro, which will inevitably soften demand for lots of things, perhaps most notably for us, energy. Oil is still priced in dollars.

      The big question I have no prediction for is what the "unseen" is. 170+ years later, Bastiat is coming back to haunt Europe, not for the first time, and not for the last I am certain. Regardless of your economic or political leanings, the unknown effects of all of this drama hangs like a massive sword of Damacles over not just Europe, not just the west, but most of the World.

      We shall see.

    3. I have never quite understood why free-market ideas (such as Bastiat advocated) have been so universally reviled in France.

    4. It's strange isn't it? Really he should have been born in Austria or Chicago.

      Government is the great fiction, through which everybody endeavors to live at the expense of everybody else.

      Frederic Bastiat