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A velvet Grexit would be Greece's best option, before the whole thing come tumbling down. Don't get me wrong, if the ECB started buying the debt of the national banks, they may yet pull it out of the fire.
An alternative to Grexit is import tariffs for Greece. The advantage of that is as follows.
Under Grexit, the extent of devaluation is unpredictable as its left to market forces presumably: Greece doesn't have enough foreign currency to defend any particular rate. Though possibly the Troika could do that for them.
With tariffs, the extent to which imports become more expensive for Greece is more controllable. Of course tariffs go against the whole grain of the EU, but desperate times call for desperate measures.
Import tariffs would be illegal under the EU. As Schauble said that a default is illegal is while on the euro and Grexit must happen first, any sort of govt control over flows (capital or goods) must be preceded by an exit on the EU as it's illegal.
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A velvet Grexit would be Greece's best option, before the whole thing come tumbling down. Don't get me wrong, if the ECB started buying the debt of the national banks, they may yet pull it out of the fire.
But examine the asset side for a change, will ya?
An alternative to Grexit is import tariffs for Greece. The advantage of that is as follows.
Under Grexit, the extent of devaluation is unpredictable as its left to market forces presumably: Greece doesn't have enough foreign currency to defend any particular rate. Though possibly the Troika could do that for them.
With tariffs, the extent to which imports become more expensive for Greece is more controllable. Of course tariffs go against the whole grain of the EU, but desperate times call for desperate measures.
Import tariffs would be illegal under the EU. As Schauble said that a default is illegal is while on the euro and Grexit must happen first, any sort of govt control over flows (capital or goods) must be preceded by an exit on the EU as it's illegal.
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