It's Easy to Leave the Euro - 11 October 2012
Lessons from an earlier monetary union…
LEAVING a currency union ain't that hard, reckons Steve Sjuggerud, writing in his Daily Wealth eletter.
Czech Republic president Vaclav Klaus published an article in Bloomberg BusinessWeek magazine this week. "I have a unique position being the last finance minister of a dissolving monetary union," he wrote.
Klaus actually knows from firsthand experience... Leaving the Euro doesn't have to be painful at all...
This week, tens of thousands of Greek demonstrators filled the streets, angry at Germany.
Demonstrators pelted police with rocks, bottles, and sticks. Germany's President Angela Merkel was visiting Greece to show her commitment to keeping Greece in the Euro.
The Greeks don't want German "help." And the people of Germany actually don't want to send their tax Dollars to Greece, either.
So why don't we just end this thing, and have Greece exit the Euro? Is it fear of a disaster if Greece does exit the Euro?
I believe Greece can leave the Euro... and it won't create disaster at all. Greece's economy makes up just 2% of the Euro area. An exit by Greece is a nonevent. If Greece exits... France, Germany, the Netherlands, etc., etc. – they wouldn't feel a thing.
Klaus knows this...
He was the Prime Minister of the Czech Republic in the mid-1990s, immediately following the breakup of Czechoslovakia:
When we dissolved Czechoslovakia into the Czech Republic and Slovakia... our idea was to keep an open free-trade area and a single currency... we discovered it was impossible.
After several weeks, we had an overnight meeting in Prague with the prime minister, the governor of the Central Bank, and the ministers of finance of the Czech Republic and Slovakia. We more or less accepted that it wasn't working. At 4 a.m. we made a decision that it would be technically possible to create two currencies.
We announced it and did it. For most Czechs, it was a nonevent.
The Greeks don't want the Germans meddling in Greece. On the flip side, German voters don't want to keep propping up Greece.
So let's get on with it. Let's let Greece get out of the Euro and start anew. That will get us past all this uncertainty and let Greece do what it wants.
As Klaus says... Announce it. Then do it. It will be a nonevent.
You can leave a monetary union. In Greece's case, let's get there already...