I do not seriously think Britain’s austerian Conservative government has a snowball’s chance in Hellas of leading a Greek bailout. Cameron and Osborne have been dragged into contributing a small amount to an EU-wide measure, having kicked up a mighty fuss and received assurances that Britain’s contribution is underwritten.
Still, I think it’d be a good idea for this government to seriously consider leading a bailout. I would have the prime minister convene a debt relief conference with (if possible) contributions from America and Canada, both of which are in late-stage talks over trade deals with the EU, and if possible South Korea, South Africa and Mexico, all of which have free trade deals already.
The IMF, Centre for European Reform and eminent economists like Paul Krugman, Joseph Stiglitz, and Jonathan Sachs all say current the current situation is unsustainable and the measures the Eurozone is imposing on Greece in return for additional loans will ruin the country even more. Debt relief (pushing back repayments) now seems to be on the table, courtesy of Angela Merkel, but that is far off and contingent on full implementation of Eurozone model austerity. Merkel has categorically ruled out a haircut (debt write off). It’s far from an Obama-style stimulus package or Sachs-model shock therapy which could actually make Greece grow again. It won’t have any impact on the currency either, because Greece will remain locked into the euro while it grows less and less competitive.
Haywire Thought 