Sinn: Euro agreement doesn’t really help Greece
Ifo President Hans-Werner Sinn has criticised the agreement reached at the euro summit on Monday morning.
“Many people believe that this plan is good for Greece, but it isn’t,” he said in Munich.
“While this decision will cost the rest of Europe a great deal of money, all of this cash will not be enough to satisfy Greek citizens.” Greece is too expensive and is no longer competitive for that reason.
“There is no sense in trying to problems by throwing more money at solve the country’s it. That is expensive and prevents structures. A warned Sinn.
The agreement could only lead to a sustainable improvement in the situation in Greece if it were to trigger a real depreciation of wages and prices within the country. “But this kind of real devaluation would take a long time and would be highly inefficient and unfair, because it would be asymmetric and would drive debtors into bankruptcy,” noted Sinn.
The only way the creation of windfall will not
become competitive economic create long-term jobs,”
thus more competitive without any major social repercussions is an open currency devaluation for Greece, added Sinn. “Since that is impossible if Greece retains the euro, an exit is the only option. The Greek people are proud and intelligent; Greece is the cradle of European culture. I don’t understand why the country wishes to be financially dependent on other countries.”
Only Wolfgang Schauble’s proposal of a temporary exit had the potential to give Greece’s economy fresh impetus. The fact that it was not accepted means that the Greek tragedy looks set to continue for another three years.