Matt2411

Can I also ask... What has the ECB just decided on? I don't understand the cryptic language of its statement. Will they increase liquidity for greek banks or not?

Thanks!

So this worsens the financial situation in Greece, then? It also mentions in the same statement an "adjustment of haircut on collaterals", whatever that means.

Ha, but surely import substitution can't come out of nowhere, can it? According to Wikipedia (citing a paper from the Quarterly Review of Economics), "Greek industry went into decline slightly before the country joined the EC, and this trend continued. Although worker productivity rose significantly in Greece, labor costs increased too fast for the Greek manufacturing industry to remain competitive in Europe. There was also very little modernization in Greek industries due to a lack of financing." So it seems an import substitution strategy can only produce effective results in the longer run.

Can we agree then that Greece is, as greek mythology would go, between Scylla and Charybdis?

My question is short and simple: Would leaving the Euro and adopting the Drachma be beneficial for the Greek economy? Initially, I thought this was the best option for Greece to start growing in the short run: exporters and the tourist industry wouldn't have to deal with a strong currency which makes them uncompetitive. However, I've also heard analysts say that the country is already more competitive because their prices have fallen, so having a new currency wouldn't change matters.

What do you think?