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Why Greece is not a problem


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#1 nimblebear

nimblebear

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Posted 13 May 2012 - 09:06 PM

It's not that Greece's situation can't be solved. Same thing with Spain, Italy, Portugal, and every other country in the Eurozone who's name is not Germany.

But here's the evidence as to why the market (collectively the sum of all analysis) doesn't care:

This is a seemingly crazy plan outlined by one Charles Smith, but it's actually not so crazy, because for all intents it is a pathway that could be followed. Some people (the lenders) might not like it. But it could be implemented.

I guess my point is, that even though you, or I, or anyone political hasn't come up with a solution to Greece's problem, it is solvable, even if collectively we might not see that solution just yet. The same logic can be applied to many other situations out there that may seem to be problems or proverbial headwinds for the markets.

Anyway, there is more here if you want to read about a plan that may or may not get implemented.
http://charleshughsm...rk-greeces.html

So here is the 3-point plan:

1. Renounce all debts denominated in the euro, i.e. a 100% writedown.

2. Accept the U.S. dollar as the national currency of Greece.

3. Engage in a transparent national dialog and reach a consensus about taxation and the role of the state in the Greek society and economy.

We might add a fourth point: renounce scams and kicking problems down the road rather than addressing them directly, sweeping dysfunction under the rug, etc.


There is a compelling internal logic to my crazy plan: when trust in national currencies and institutions is lost, then the black market becomes the trustworthy place to engage in trade. The world's favorite black market currency is of course the U.S. dollar. In this sense, for Greece to officially accept the U.S. dollar as its currency is simply a recognition of the natural progression from a currency that is no longer viable to one that is.
OTIS.