Galery

1

The ruling party won the last election on a totally different platform. Essentially they lack the popular mandate for most of the policies they implement. So a general election would indeed remedy the crisis of legitimacy government actions currently face. Yet little will change post-election since the two big parties in Greece have much more in common than they like to admit. Greece desperately needs a new and functional democratic constitution and calling for the election of a new constitutional assembly and a referendum over a new constitution is much more important than a general election. The new constitution should carve certain public functions such as education, fiscal policies, the justice system, and defence out of the imperium that political parties currently maintain over them.

Clearly the party system and the way it is financed needs a radical overhaul and a directly elected president expressing a broader agenda should replace the current prime ministerial system. Other reforms should refer to promotion of democratic accountability through referenda and a bicameral parliament. The new constitution should also promote private enterprise, free competition targeting the local robber baron cartels that have deformed the pursuit of private enterprise in the country and provide institutional checks and balances, as well as for an independent justice system.

One of the conditions for Greece to obtain the second rescue package is the voluntary participation of private owners in the rescheduling of the debt payments of Greek government bonds for the next three to four years. In that case what will stop the credit agencies to read this action as a credit event?

ISDA does not share the view of credit rating agencies (CRAs) and ISDA is the author and provider of the contract on which CDSs are concluded and the guardian of the true interpretation of its ‘definitions’. Unlike ISDA the Credit Rating Agencies seem like uninvited guests intent on ruining the negotiations. Clearly they rather express the agony of bond holders rather than an objective view. There should clearly be a way to roll over, reschedule, and then restructure, through a generous haircut, Greek debt without fearing the overreaction and the views of the CRAs, which in the past have proved that their opinion is nearly worthless. The successive restructurings of Latin American debt in the past 30 years would have been blocked

Many economists predict that Greece will have to exit the eurozone sooner or later. Do you agree with this statement and if so, under what conditions will this happen? What would be the consequences for Greece and the European Union in this case?

If the governance reforms suggested above are not implemented soon and a payments transfer mechanism is not established to alleviate the competitive pressures on deficit EMU countries, rendering in the process the EMU into a true currency union, not only Greece will have to leave the Euro but also the Eurozone will survive in a different form losing at least half of its existing members. A Greek exit would be a catastrophic development for all. For the International financial system the chances of repayment of Greek debt would edge closer to zero, creating in this case a true Lehman type event. Greece itself would experience for years of hyper-inflation and successive devaluations, which would mean the disappearance of the savings of Greek people.

This government suffers serious criticism of the lack of measures to restore economic growth. How can it be achieved in conditions of excessive deficit and large external debt?

The government’s policies were fatally flawed leading to massive contraction of output. Not only did not negotiate any kind of economic stimuli with the Troika, it also remained blind to massive rates of negative growth showing how unfit was the specific group of people to handle the biggest crisis of the Greek economy in the post-war years.

There are four prerequisites for growth. A targeted programme of infrastructure investment. Privatisations that attract foreign investment. Credit expansion and fostering of worthy private enterprise. Tax breaks to domestic and foreign investors that enhance the country’s productive capabilities and increase employment. Adoption of such policies would not only increase tax takings, but would also stimulate private sector employment relieving the social pressure created by rising unemployment would also create an environment of renewed optimism, which is also a key factor for economic development.