It has never happened before – certainly not since the 2nd World War – that a developed economy defaults on payments to creditors and slides back to be a developing nation. But now Greece joins Argentina, the Ivory Coast, the Dominican Republic, Russia, Ukraine and Ecuador, among other developing countries, as countries which have defaulted on loan repayments to international creditors.
Greece has however defaulted many times before; in 1826, 1843, 1860, 1893, 1932 and now in 2015.
The International Monetary Fund on Tuesday confirmed Greece had not made its 1.5 billion euro ($1.7 billion) loan repayment to the Fund, making it the first advanced economy to ever be in arrears to the Fund.
The missed payment, the largest in the Fund’s history, is equivalent to a default, in that both imply a breach of Athens’ obligations. IMF spokesman Gerry Rice said Greece can now only receive further IMF funding once the arrears are cleared.
The Greek default is not only an indictment of the past profligacy and mismanagement in Greece but also of the EU’s (and the Eurozone’s) recklessly expansionist policies.
It is time, I think, for Greece to return to the Drachma. And then an orderly Grexit – as orderly as may be possible. The Euro is too far ahead of its time. As of now it is a failed experiment and the Eurozone needs to shrink sharply, if not to be entirely dismantled.
If the Deutschmark is not to return then at least a N.Euro and a S.Euro are called for?
The k2p blog 