The perfect solution to the "Grexit" problem, where no one loses face in the eyes of the electorate nor its reputation on international Financial Markets, will probably be adopted today in Brussels, or very shortly, after the meeting of Finance Ministers of the EUROZONE !
The problem is a classic ! A drunk wanted 10 Euros for a meal ! A magnanimous donor gave him a "loan" of 100 Euros to "sleep it off". The drunk had another drink to celebrate !
The Greek State now needs and wants a bridging loan to cover foreseeable short term obligations in order to start the long overdue reorganisation of the Greek economy. Greece cannot at the same time continue repayments due on its debts of 245 billion Euros to the Eurozone !
Tsipras, the new Greek Prime Minister was recently elected on the back of these promises to the voters !
The only way forward now is to cancel all interest falling due and the repayments, for a period of at least ten years ! By then, in 2025, Greece should have recovered financially, to resume repayments but the present day value value of the Euro will probably have declined by at least 20% ! This fall in value will never be seen in Financial statements by electors !
The ultimate depreciation of the Euro may be even more than 20% ! For example, the Policy of "Quantitative Easing" by the European Central Bank, to encourage investment must not be allowed to flood Financial Markets with too many Euros. This however is really a pure Eurozone problem, not a Greek problem !
Greece really wants to stay in the EUROZONE ! If it is forced out it must readopt the Drachma, but this would not be easy and could be painful ! For example, would Putin and Russia not like to seduce Greece with promises of financial and economic help ?
Beware of the Bear-hug !
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