A Greek exit from the euro is the most sensible thing to do under the current circumstances, says the head of the German Ifo economic think tank. He says the 'experiment' to rescue the country financially has failed.
Membership in the eurozone continued to be a huge burden on the political system in cash-strapped Greece, the head of the renowned German Ifo economic research institute, Hans-Werner Sinn, told reporters in Berlin on Monday.
"I doubt whether a continuation of current policies is beneficial," Sinn commented, adding that Greek Prime Minister "Alexis Tsipras' radical government" had come to power also as a result of economic strains in the euro area too big to handle for Greece.
He said mass unemployment in the southern European nation made it abundantly clear that creditors' attempts to rescue the country had not been able to make up for a lack of competitiveness.
"It's been an experiment, but the experiment has failed," Sinn summed up recent developments.
Drachma no tragedy
The Munich-based economist advised Athens to return to the pre-euro drachma, arguing that the situation would change for the better instantly through currency depreciation by 50 percent or even more.
Real estate objects would only cost half of their current value, leading to a building boom in the nation," Sinn argued. "The Greek would stop buying foreign products and turn to domestic products instead."
Sinn has been a staunch opponent of more Emergency Liquidity Assistance (ELA) loans for the country, saying they're making things only worse.
He argues that Greek citizens get loans from their banks, with the money basically counter-financed by the national central bank. And once they got the money, people would move it outside the country for safety reasons, he maintained.
hg/pad (AFP, Reuters)