Could Greece switch to dollar and avoid bankruptcy?

Posted on 03 December 2011 by Emmanouela Seiradaki

The European crisis has now turned out to be so big and irrational that maybe countries like Italy or even France are in danger of bankruptcy. Angela Merkel might be the most important person in the world right now. She holds the future financial well being of all of us in her hands but it has become clear she’s not up to the job. So Americans targeted the political gap and are ready to penetrate in Europe via its weakest member, Greece. After all, if the euro doesn’t want Greece, maybe the dollar does.

The Euro is Dead Long Live the Dollar and the New Drachma

EPIKAIRA magazine refers to a study by the FED according to which if euro-less Greece doesn’t want to sink in chaos, there must be a transitional phase (pegging) from the euro to the new drachma via the dollar. Greece will have to adopt the dollar as its national currency alongside with the new drachma for at least five years.The new drachma will only be used for Swap deals between the US and Greece with an initial exchange rate 30 to 1. The first result of this transition will be Euro’s devaluation around 50%, especially if more EU members follow Greece’s lead and exit the euro. The second result will be that due to euro’s devaluation the dollarized value of the Greek debt which is in Euros will be decreased. Should these estimations materialise, the Greek debt will be decreased without a new haircut and Greece will not go bankrupt. The third result will be that the FED will provide financial help to Greece via low-interest rate loans. And the fourth, is that the Bank of Greece will print out new drachmas that as mentioned earlier will only be used for Swap deals. After this transitional phase that will last around five years, Greeks will use the new drachma as their national currency.

Greece Becoming Another American State?

FED’s study only mentions the advantages of such a deal. It talks about how Americans are going to invest in Greece, how American tourists will flow in the Greek islands , how the country will regain its credibility and how tiny Greece will have America’s full diplomatic support. However, knowing US politics one easily imagines that there is a high price to pay for this generous gesture. With full financial, diplomatic and political dependency on the US and with the EU out of the picture, Greece will be basically turned into an “American protectorate”.

But is this really such a big deal? With an emergency regime having taken power and submitting draft budgets of our axing and spending to Barroso for oversight, to be subject to Brussels’ “enhanced surveillance”, Greece is already a ” German protectorate”. Barroso and Merkel don’t want to hear nonsense about popular elections or national referendums. They want Europe ruled by Aristotle’s aristocrats, by people like them. So what’s the difference really? If the decisions are being taken in Washington or Brussels how is that going to effect the lives of Greeks who struggle to make ends meet on a daily basis and have no power of say, since elections and referendums are catastrophic? And how did a Union that started up to unite Europe after the second world war and ensure democracy for its member-states ended up being allergic to democratic procedures?

(Sources: EPIKAIRA)

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