Friday, May 18, 2012
Scared to death with Greece
Here we go again. The continuing (and agonizing ) saga of what would and would not happen if and when Greece leaves the euro zone and plunge into once again to its beloved Drachma currency is anybody's guess. But I believe that it would happen soon because the whole world has started to get fed up with all the suspense of Greece leaving or not leaving and there is certainly a fatigue creeping up on the donor countries to let it be and then deal with the consequences later, since there can only be finite amount of money that the European Union can provide to Greece until it realizes that it would not cure the chronic problem of Greece's economy, namely its cost structure and rigid labor policies. The Greek people would have to realize that they will have to become super competitive European nation in order for them to compete in the world economy. Tourism may generate some money but if they want to remain in Euro and also improve their lives, they will have to become very cost competitive and also brutally loose with their labor laws so that they can compete with the India and other low costs center. If they do that then the European would rather go to Greece for their outsourcing rather than India or other outsourcing destinations. Other thing is they will have to revive their manufacturing so that the European could get their goods not from Asia but from Greece. Unless the costs of labor comes down, they would not be able to pay back either the Europeans or their own workers and they may be involuntarily leave the Euro Zone and take more of the others down with them.