In his article in "Financial Times Deutschland", the famous economist Nouriel Roubini, who had predicted the global recession of 2008 in 2006, says that either this year or the next, Greece will be forced to go bankrupt and leave the eurozone. This will happen even if a government will finally be formed after the elections of June.
Mr. Roubini says that Greece has fallen into a vicious cycle of bankruptcy, lack of competitiveness and continuous recession.
The restructuring of Greek debt wasn’t enough... But, even if the terms were better, growth is possible only through the rapid restoration of competitiveness. In order to achieve this, a devaluation is required; which is probably unlikely to happen through a depreciation of the euro, because Germany is strong, while the ECB does not relax the currency policy followed.
It is also unlikely that the structural reforms will rapidly reduce the cost, through productivity growth which will outpace the salaries. Even an instant deflation of values and wages would lead to a five year recession.
Mr. Roubini concludes that the only option is Greece to exit the eurozone and return to the drachma, in order to enhance competitiveness and stimulate growth.
Of course, he emphasizes that this solution will be accompanied by a traumatic process, not only for Greece, but also for the financial institutions in Europe, which will suffer significant capital losses.
In addition, Greece will have to restructure the debt again, while concerning the obligations towards the Troika will have to be an extension of payback dates and reduce in the interest rate.
It is not true that Greece's exit from the eurozone will significantly shrink the GDP of the country, because deflation has the same effect.
On the contrary, reintroducing the drachma would have the immediate effect of growth and prevent the recession for decades. Lenders, in order to avoid the even greater losses from the reduction of the value of the new currency against the Euro, will use the rest of the loan aid to Greece, which troika has at its disposal.
"To see the slow and disordered collapse of the Greek economy and society would be much worse," Roubini says.