“Greece has no chance to become competitive in the Eurozone. She would have to deflate prices by 31% in order to reach the price level of Turkey”.
“Greece must leave the Eurozone. If we expect Greece to reach competitiveness through deflation, the country will break apart. European politicians can say the oppositve ten times but certain things are not possible economically”.
“The insistence on wrong prices is the Eurozone’s foremost problem. That can break the Eurozone apart. The debt problem is minor in comparison. The South European countries have not come any closer to the solution of their problems. They should take Ireland as an example where prices vis-à-vis their trading partners fell by 16% in the last 5 years. Ireland had a current account deficit of 4% and now the current account is in surplus!”
“Greece lacks an export lobby which would pressure for deflation so that competitiveness returns. Instead, Greece as a strong import lobby which resists defaltion because that would ruin their business”.
“It would be better to give the 130 BN EUR to Greece as transition aid for a return to the Drachma”.
“There are 3 options: (a) we continue to finance the current account deficit of about 10% (which will eventually convert to gifts); (b) Greece exits the Eurozone; or (c) Greece deflates dramatically. The latter will never be accepted by the unions”.
“The Target-2 financings have made Germany subject to blackmail because everyone knows that the Bundesbank would presently lose 500 BN EUR should the Eurozone fall apart; and that number is increasing. Germany is condemned to save the Eurozone”.
“Mrs. Merkel is being pressured from all sides to assume all the risk. Against that pressure she has developed the strategy of muddling through. She opens her pocket book when the pressure gets too much but she doesn’t give everything she has because she knows that her friends would lose interest in her if she did. She tries her best but were are trapped, nevertheless”.