I have read increasingly over the last couple of weeks regarding the concern raised by the potential of Greece leaving, or being forced out of the EEC. Well, the bogyman left wing party has just been democratically elected and I really do wonder that if they leave or are forced out, will it be the end of the world for either them or Europe in general?
You see, I’m old enough to be a survivor / observer of the European “Ancien Regime.” No not that one in France before the French Revolution of 1789, but of a post war Europe and the pre formation of the EEC.
Travelling around Europe in those days as a student was an adventure. Well for a start; there were passports that were stamped at every border, crossing the Channel by boat, alien foods like horse steak, schnitzel and something called “vinaigrette” instead of salad cream from a bottle. In Italy it was a mind blowing 1,643 lira to the pound, and the bigger the monetary denomination, the bigger the bank notes, in themselves works of art. The Deutschmark was strong as befitted the Germanic character, the French Franc confusing as there was the old franc and the “nouvelle franc”, and the Spanish bank notes were like tattered worn dirty fragments of the Dead Sea Scrolls.
But I digress into nostalgia once again. Back to Greece. If it leaves, what happens? Well if this Mediterranean race does not come to heel in an expedient manner, then the all-powerful Troika will not supply the bail out money, and Greece will be obliged to leave the euro and print drachmas again. If the new guy at the top gets his act together quickly to put in place restrictions on transferring money overseas, then it will mitigate against a run on the banks. But there will occur anyway a massive devaluation of the new/old national currency.
And then? Well, it might sound simplistic, but then market forces kick in as Greece at one stroke gains a big chunk of competitiveness over its neighbours. It becomes ultra-cheap for holidays and attracts tourists, its labour is cheap so it becomes almost another China, but most of all it turns round to the creditors and says “Can’t pay now / Pay later.” That was not working anyway, a bit like borrowing from Visa to pay MasterCard. The way ahead is still tough for the Greeks, but at least it gives them a fighting chance.