“[An] excellent study both of the eurozone and of the Greek case by Jason Manolopoulos, Greece’s ‘Odious’ Debt … shows conclusively that the eurozone is far from an optimum currency area.”
Manolopoulos is blunt in his assessment of the of the eurozone in his Greek Crisis Q&A with Investment Week: “only if real convergence and economic harmonisation [have] been achieved should countries be part of the same currency union.” For Greece, “convergence and economic harmonisation” was absent from the start. Three years after it joined the Euro, Eurostat – the EU’s statistics agency – noticed that the Greek deficit was never actually low enough to satisfy EU rules.
Manolopoulos’ extensive study/autopsy encompasses the intricate economic, historical and psychological dynamics responsible for setting Greece on the course towards ecomonic calamity. David Walker, in his weekly column for Investment Week, voiced his approval of Manolopoulos’ comprehensive approach:
“As with so much economic history, Manolopoulos reveals just how many factors, and negligent hubristic individuals, helped cause the monumental disaster. He is even-handed in apportioning blame – everyone carries some.”
Greece is perhaps overly optimistic about its chances for a speedy recuperation. Their recovery plan announces an intention to cut their budget deficit by ten percent within three years. Sweden managed such a feat in the early 90s, but they did so in the midst of a global economic boom rather than recession. Sweden entered the global crisis all the stronger for having learnt tough lessons in the 90s; Greece, and other countries, would do well to follow their example. For anybody interested in doing so, reading Jason Manolopoulos’ book is a superb way to start.