Sensible Perspectives

Greek Crisis Avoided — For Now

Posted by on July 29, 2015

One cannot open a newspaper or listen to news on the radio without hearing about Greece, Greek default, and the possibility of “Grexit” or Greece exiting the Eurozone. The new bailout deal does not change the fact that Greece and Europe have multiple issues, all inter-related, and none easily soluble. Here is a high level summary:

All three are big problems. The last is fundamental, and will take decades if not generations to resolve.

These are issues for Europe as well as for Greece directly. Greece is a member of both the EU and the Eurozone, a customs union and a currency union respectively. Greece is a weak link, and the strong members are providing subsidies, directly by writing off debt and indirectly by all of the emotional and political energy they are spending trying to help Greece solve its problems.

All of that said, Greek GDP is only 2% of EU GDP, and Greece’s 11 million people are only 2% of the EU’s population. Greece’s significant economic problems will be an obstacle to the success of the European project for at least a generation to come, but only a small obstacle.

[1] http://www.theguardian.com/world/2012/sep/09/greece-tax-evasion-professional-classes?CMP=twt_gu

[2] http://www.theguardian.com/world/2014/dec/03/greece-corruption-alive-and-well