Sinn: Euro agree­ment doesn’t re­ally help Greece

Financial Mirror (Cyprus) - - FRONT PAGE -

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.

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