Some Thoughts on the Greek Puzzle


What is going to happen in Greece?

I do not believe that any of the “programs”, also known as memoranda, agreed between Greece and the debtors work.

The problems of Greece are far more serious. These programs only touch on the surface and usually are ideologically laden formulae, not practical solutions.

The Greek economy will never recover to its levels before the crisis. Therefore, the debt will never be paid back.

Such an acknowledgement cannot be made before the 2017 German elections, but it will need to be made immediately after.

The issue is which formula will be adopted.

According to various sources, scenarios have been developed and are under discussion.

One of the critical issues is Greece’s membership in the Eurozone.

Greece is so weak that a “strong” currency like the Euro is like tying a rock to the foot of a drowning swimmer.

Sooner (I hope) or later the Germans will make their minds up that Greece does not belong to the Eurozone.

For the sake of convenience and practicality, this decision may be coupled with the one on the Greek debt.

In conclusion, unless there is a game changing development, e.g. Italy, we should expect major developments in Greece in the year 2018.

The prognosis is that during this year the two major issues of the Greek crisis, i.e. the debt and the Euro, will be resolved.

Most likely formula will be an expulsion from the Eurozone, combined with – as a pain killer – the drastic reduction of the debt. The transition period will be between two and three years.