USA TODAY International Edition
Banks in Greece reopen, but the crisis isn’t over
Greek banks opened for the first time in three weeks Monday, providing people in the debtplagued nation with some semblance of normalcy, though not full access to their money. The move comes after the Greek parliament voted to enact further financial reforms and to accept billions more in assistance, making it more likely that Greece will keep using the euro.
Greece and the rest of the eurozone might be better off if they went their separate ways. Greece would have the flexibility to devalue its currency and grow through exports. And Europe would show that it is serious about enforcing fiscal rules on countries that want to be part of its currency club.
But both sides seem eager maintain the status quo. That means some accommodations will have to be made, or they will be in the same place in three years when the spigot of money from this latest bailout runs dry.
Specifically, it is time for Europe to restructure Greece’s unsustainable debt load. Going easy on a country that lied about its finances to get into the eurozone and then wildly overspent might seem counterintuitive.
Even so, the simple fact is that Greece will never be able to pay off its debts of roughly $ 350 billion, or 177% of its annual economic output. This will be especially true while it is undertaking austerity measures that dampen growth in the short run.
The Europeans ( particularly the Germans) who think it is imperative to teach Greece a lesson have good reasons to feel the way they do. Their economies have done relatively well with less government spending and less borrowing. And they have already been asked to pony up considerable amounts to help the Greeks.
But what they lack is a dose of pragmatism. In the 2008 financial crisis, the U. S. Congress, then- President George W. Bush and the Federal Reserve resisted calls to make Wall Street bankers suffer for their transgressions. Doing so, by letting one bank after another fail, might have given Americans some sense of satisfaction. But it would have been disastrous for the economy.
Similarly, dragging Greece along with no end to its troubles makes no sense now for Europe. Uncertainly about Greece’s position has already pushed down stocks in markets as far away as the USA. And ongoing economic pain there would invite political instability, extremism and meddling from the likes of Vladimir Putin, who would love to draw Greece closer to Russia.
Greece is far from blameless. But the same is true of the eurozone, that loose confederation of 19 European nations united by a common currency. If they are going to stay together, it’s best that they find a way to get along.