The modern Greek tragedy, the Grexit, the euro crisis and the currency wars

Greece and to a lesser degree, the European south are the victims of the overvalued euro and of the strict austerity policies imposed under Berlin guidelines. Most of the faster-growing countries support their exports with controlled currency devaluations, as a basic instrument of their independent monetary policy. They follow the Chinese example of implementing proper soft monetary policies, in the light of the present currency wars, mainly between the dollar, the euro, and the yen. Greece has surrendered this basic weapon of currency sovereignty to Berlin, whose main concern is the strengthening of the euro, in an effort to verify the  German economic and political supremacy. Yet even for the E.U. as a unique entity, this policy appears to be wrong and the virus of stagnation from the south is gradually invading the north. The overvalued euro, the austerity policies of the eurozone, together with the malpractices of the international markets, are mainly to blame. The imposition of an optimal currency area such as the eurozone in totally different economies and without a fair political umbrella has been wrong. For Greece, it has been catastrophic. Our economy is mainly based on tourism that requires a labor-intensive production process. Labor costs can not be compressed below a certain level so that the total production costs will be lower or equal to that of our competitors in the Balkans and the Mediterranean Sea. 

In front of the deadlock, a properly structured Grexit, temporary or permanent, is the only solution. This should be accompanied by a controlled bankruptcy, a generous cut of debts, and an extension of their repayment period. The next step is the devaluation of the new drachma initially at 25-30%, as a necessary precondition for regaining the lost competitiveness of the Greek economy. The amount of currency circulation should be controlled properly so as to avoid hyperinflation. 

Low and medium incomes should be increased eventually at a moderate level and in accordance with the shift towards internal consumption, so as to avoid the dangers of hyperinflation. The strengthening of productive investments and the protection of social welfare are also necessary. Government spending restrictions, the combat of corruption, impunity, bureaucracy and tax evasion, are also necessary for a healthy new beginning.