Lessons from Greece

23rd November, 2009

Very telling article in the Telegraph today on the state of the Greek economy. It’s available HERE. Once you strip out the anti-euro bias the article makes some very telling points about the dangers facing small open economies in the euro zone.

2 lessons appear relevant to Ireland:

  1. Firstly, the unthinkable can happen,states can face bankruptcy and be paralysed by the prospect of it.
  2. Secondly, membership of the euro does not negate the need for sound fiscal policies and discipline. Indeed, given the likely internal pressures within the euro in the coming years the kind of antics that our government got up to between 2002 and 2007 may not be allowed again.

That does pose a question in turn, though. What does ‘not allowed’ actually infer? Will the anchors of the eurozone be willing to allow the credibility of the currency be challenged by the behaviour of other states? Seems to be that the answering of this question will have a very big impact on the health of our economic sovereignty in the future.