Klaus Adam Sees It Our Way on Greece

Professor Klaus Adam  writes,

"This unfortunate outcome must be blamed on the inability of the Greek political elites to deliver the structural economic changes that are needed. Salary cuts and tax increases alone simply cannot re-establish the competitiveness of the economy. And if true economic reform cannot be delivered, then a euro- area exit remains the only other available option. This is a sad and unavoidable conclusion, and it follows from the simple fact that Greece cannot go on borrowing forever."

"A Greek debt default and a simultaneous euro area exit would achieve all of these goals, virtually overnight. Obviously, the adjustment would be rough and turmoil would probably prevail for a number of months, but the adjustment would take place."

We've written about this possibility since 2011, when the markets were oblivious to anything but rosy scenarios for the euro experiment.  However, given years of the dithering by European leaders and their enablers like the ECB and the IMF, a Greek exit alone won't end the issues within the EU.  It may resolve the pain for the Greek population and perhaps allow some real reforms under the leadership of its own politicians.  The broader issues within the EU and the fissures between France and Germany will only intensify.