The post you are reporting:
Interesting points from Keith and Howard.
Now with regards to the letter from Calais, I should also add the following: Greece has to leave the euro. One simple reason being the 10 year bond yields.
No country in their right mind would sell 10 years bonds at 30% interest and then expect to remain within the euro and avoid 30% inflation.
It is obvious that Greece must leave the euro any time soon, and print their own currency, initially one drachma to one euro, and that within 24 hours this currency will be devalued through extra printing.
Inflation in Greece must at some point reach 30%+, or their future currency must be devalued by at least 30% through extra money printing, in order to repay the 30% on their 10 year bonds.
Were Greece to remain in the eurozone, Germany, France and D. Cameron would have to dish out heaps of money to repay the Greek bonds when they are cashed in, PLUS the 30% interest.
This would be impossible to do. So it is clear that only Greece alone can do this through a new currency that becomes immediately devalued.
Similarly, Spain and Italy's 6%+ 10 year bond interest rates require an exit from the euro, as these bonds will need to be repaid with local and devalued currency.
My guess is, the economist in Calais, who knows this beyond doubt, is suggesting the euro be devalued to repay the enormous interest rates on Greek bonds, and Italian, Spanish and Portuguese bonds.
But if this were to work out, then anyone of us buying Greek bonds today (I haven't got the money to do so) would get 34% interest back, all paid in euro!
In that case, our banks, and Germany and Frances' banks, would all go for Greek bonds at 34% interest, and all their financial problems would be solved for a few years.
ONLY if Greece remained in the eurozone, though, and assuming the European Central Bank ECB would pay these interest rates on behalf of the Greek state.
To do so, the ECB would need to print an awful sum of money.
The result would be, people and companies would mass-transfer their money to Greece and invest in Greek bonds. All fantasy, of-course. It would be sheer economic suicide.
So evidently, Greece can only leave the eurozone, and Italy, Spain and Portugal will follow.