I see the news that Anders Borg is calming that Greece is going to leave the euro in the next six months. To start with, Anders Borg is wrong and is going to be wrong. For Greece, leaving the euro would be a economic disaster on Icelandic scale. Dropping the value of the countries currency is not a fix. That is not even a temporary solution. Dropping the value of a country currency means that economic policies of that country have failed at some or all levels. While it makes export cheaper and increases it’s value in the terms of local concurrency. It also increases inflation, imported prices and interest rates. None of that are going help a country getting trough an recession like the one Greece is currently having. For Greece that would be getting from bad to worse in terms of economics stability and chance of recovery. Sure, there are going to be several bad months ahead for Greece. But then the pain is going to be over. As in breaking a leg always involves a pain before the damage can be recovered. But the responsibly of recovery lies with the Greece public. Not IMF or the EU. But with them self (same goes for Icelanders for example. But they are not getting it seems).
The problem with economists like Anders Borg is that there “science” is wrong and it is adjusted to fit there newest models. Anders Borg is no exception it seems in this matter. So I am sure that he is going to be wrong. Greece is going to stay in the eurozone and get over the crises that way. I just hope that Anders Borg does not implode the Swedish krona while he is acting as a minister in Sweden.
Why Economic Models Are Always Wrong (scientificamerican.com)