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Respopnse To The Greek Crisis
Respopnse To The Greek Crisis
Respopnse To The Greek Crisis
Maxens Berre
Basically, any response should include the following measures: A private-sector financial and banking-sector agreement which resemble the Vienna Initiative, whereby a voluntary agreement can be reached with the banks in order to minimize the economic contraction caused by bank sell-offs of Greek assets. As far-fetched as it sounds, this strategy worked in Eastern Europe in 2009. In order to bolster revenues, the Greek tax code should be enforced with the institutional support of the EU. This is the sort of institutional support which would both help resolve the sovereign debt problems and bolster Brussels credibility. This in turn, would reduce the riskpremium involved. The targeted expansion of the money supply. This means that the money supply should not just be increased, but that the new money should be sent to specific trouble areas in the Mediterranean economy. This would serve to reduce how much the money supply actually needs to be expanded by, (thus reducing the threat of inflation), while cutting down on how much of the new money supply is waster (also reducing the threat of inflation). This plan can be said to be based on the British WWI-financial crisis during which they targeted specifically the import-export financial sector for monetization. It worked. The UK economy recovered from being put under embargo by German then the worlds 2nd economy. With this experience in mind, a good way to directly monetize the problem areas would be for a stabilizing proportion of Greek bonds to be bought off of the market. The implementation of European microprudential financial and banking regulation should ensure that any new money actually makes it from the financial sector to the real economy, in order to re-establish and bolster production.
Maxens Berre
Maxens Berre