tag:blogger.com,1999:blog-33693245.post5973796658662654314..comments2024-03-04T23:40:58.133+05:30Comments on The Big Picture: Grexit drama is still unfoldingThe Big Picturehttp://www.blogger.com/profile/06018983225756352176noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-33693245.post-42596759450875688332015-07-20T11:03:28.963+05:302015-07-20T11:03:28.963+05:30Srivarahan, Whatever Greece's original sin, th...Srivarahan, Whatever Greece's original sin, the rise in the debt to gdp ratio is the result of austerity policies forced on it. Debt has to be reduced for growth to resume. Do we want to punish Greece for its past sins or do we want a way out of the present problem?<br /><br />TTRT T Ram Mohanhttps://www.blogger.com/profile/06925858642839337950noreply@blogger.comtag:blogger.com,1999:blog-33693245.post-57661861895946539312015-07-19T18:46:15.444+05:302015-07-19T18:46:15.444+05:30Will debt forgiveness not amount to incentivisatio...Will debt forgiveness not amount to incentivisation of indolence? Greece entered Euro Union by faking its financials. The basic moral and legal principle that fraud should give no advantage to the fraudster cannot be transgressed. Waivers now will snowball into major disasters in future. The choice is not between forgiveness and failure, but between discipline and disaster.K.R.Srivarahanhttps://www.blogger.com/profile/12303077412055435963noreply@blogger.comtag:blogger.com,1999:blog-33693245.post-6479693153536012382015-07-11T15:08:45.073+05:302015-07-11T15:08:45.073+05:30Great comments, anonymous. Except that I don't...Great comments, anonymous. Except that I don't believe that reducing consumption to autonomous levels is politically feasible or socially desirable.There has to be a combination of debt forgiveness, measures to augment tax revenues and a boost to economic growth. <br /><br />TTRT T Ram Mohanhttps://www.blogger.com/profile/06925858642839337950noreply@blogger.comtag:blogger.com,1999:blog-33693245.post-40813944875615019182015-07-10T12:29:27.864+05:302015-07-10T12:29:27.864+05:30My two cents. Please correct if I am wrong.
I beli...My two cents. Please correct if I am wrong.<br />I believe it is the fiduciary duty of lender to ensure that the borrower is going to be able to repay the loan. If that due diligence is not done, then lender is equally to blame.<br /><br />When Greece joined EU, it was after diluting a lot of rules of financial, liquidity, banking rules for EU hoping that Greece would set its house in order soon. But, that was never to be and public corruption and tax avoidance was never checked by governments.<br />Joining EU made availability of loans easier and the loans taken were majorly consumption loan with no productive value coming from them. The tourism sector, that was the backbone of Greece, faltered after global crisis and decreasing disposable income.<br /><br />C+I+G+NX method:<br />I believe the way out is by following these 5 steps:<br />1. restructuring the entire debt for 50 years with debt tranches to be repaid based on favorable drachma/ euro exchange rates, using derivatives, hedging etc. (Reduce C, to autonomous consumption levels through austerity)<br />2. setting up manufacturing bases (in SEZ fashion) for firms to create jobs that contribute to growth of nation's GDP (basically let in 1 million Indians and see how they transform any country of the world). (Result: Increase in I and NX, strengthening of Drachma)<br />3. IT based income and property tax collection systems with stiff penalties for tax avoidance (Result: Decrease in external debt)<br />4. check on corruption<br />5. leverage its long coastline with developing major container traffic ports<br /><br />After all EU left the kid in the room with cookie jar and now it is punishing it for eating all the cookies. India helped world once when it faced Y2K by providing cheap, efficient COBOL programmers. Now, its the time countries opened up for bulk migration, settling and work allocation to Indians too. IT firms like Infosys with billions of dollars of cash reserves would love to set up development centers there as it would provide both time-zone benefit and access to Europe directly.<br />But, geopolitical situations are best left to be solved on their own, never did the economists ever got a place on such high tables. Let us see what happens in future!Anonymousnoreply@blogger.com