The Wall Street Journal recently published a letter that should make us be very concerned:
“Your editorial on Greece, writes D.P. Marchessini from London, assumes that Greece can be saved by “reforms” (“The Case for Letting Greece Go,” April 9). A look at history would show that this isn’t true; Greece has never been a self-sustaining country. Since modern Greece was founded in 1832, the Greek government has defaulted six times (this will be the seventh), and for half of these years was either in default or in reconstruction.
The U.K. has a population of about 65 million and has about 500,000 civil servants. Greece has a population of about 11 million and its civil service has 790,000 people. If you add their families to these 790,000 people, Mr. Marchssini adds, we are talking about three million people, or about 30% of Greece. What can any Greek government do about that?”
The letter writer continues: “Yet the eurozone doesn’t want to let Greece go. Contrary to your editorial, a “Grexit” will mean that they will have to reflect all the Greek losses in their national accounts (at the moment, all the Greek bonds are valued at par).
“If Greece goes, they will take big hits in their accounts which are already very fragile. They obviously don’t want that. But, as you say, they cannot give the Greeks money without conditions either.”
This something to think about.