Opinion – Greece’s Problem Is More Complicated than Austerity – HBR – John Gelmini

The short answer to Dr Alf’s question is ‘never’.

With regard to the Michael Jacobides article, the problems faced by Greece are considerably more complex than just austerity and its application.

Forcing the Greek government to remove barriers to competition and innovation will help but on their own they will not be enough.

Measures to change cultural values, like early retirement on a full pension, lack of productivity, tax evasion, corruption and theft of monies from the public purse will also be needed.

Then, the Greek economy needs restructuring, plus marketing to bring in wealthy tourists and conference attendees. After that university degrees need to be matched to the skills the country needs – there’s too much waste in Greece’s education system.

John Gelmini

Greece debt crisis: Eurozone sets ‘final deadline’ for new plan – BBC News

DAVOS/SWITZERLAND, 28JAN11 - Angela Merkel, Fe...

DAVOS/SWITZERLAND, 28JAN11 – Angela Merkel, Federal Chancellor of Germany speaks during the session ‘Revitalizing Global Trade’ at the Annual Meeting 2011 of the World Economic Forum in Davos, Switzerland, January 28, 2011. Copyright by World Economic Forum swiss-image.ch/Photo by Sebastian Derungs (Photo credit: Wikipedia)

According to this excellent BBC article, Europe will decide to pull-the-plug on Greece on Sunday after a full EU summit – this is if they have not approved the new deal that they have demanded from Greece.

via Greece debt crisis: Eurozone sets ‘final deadline’ for new plan – BBC News.

Many creditors were incredulous and angered when the new finance minister of Greece failed to offer a new written proposal on Tuesday. The new finance minister of Greece simply gave a verbal restatement of Greece’s previous offer.

The good news is that Angela Merkel has suggested that the proposed deal must be a long-term solution, not a quick fix.

With the Grexit now the default option, expect widespread selling and shorting of European stocks this week. Next Monday, the World’s financial markets are in for a massive correction. In the case of a deal on Sunday, there will be a gigantic upswing in markets but failure will probably lead to a 2008 level crash. Next week, Greece’s banks will start failing and pensioners will be paid in IOUs, the beginning of a new Greek tragedy – probably a humanitarian disaster with the World airlifting aide and international charities mobilized.

Thoughts?