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Greek debt crisis is a European problem – with a political solution

If Greece goes bankrupt, what lies ahead is an economic and political crisis worse than that of 2008. Solutions exist. Europe is in dire need of the political courage to implement them.

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The Greek financial crisis is neither Greek nor financial any more. It is a political crisis of the whole Europe. Its solution is no longer financial, but political. It is no longer a matter just for Athens, but for Brussels. Indeed, it is now a Franco-German problem above all, since their banks are most exposed.

Greece will never repay its debts. The numerous aid plans for Greece, even if they have so far succeeded in avoiding default, failed to clear the long-term liabilities. One must face the facts, which have been known for a long time: No common currency area can last without a dominant country or without some form of federalism (as in the US).

The current crisis cannot be resolved by Greece exiting the eurozone, as some have suggested. This would undermine the European banking system within days and increase the public debt of other European countries. And we cannot expect a miracle from Greece, as if it could undo the results of 30 years of lax policies in a few months.

The mistakes that got us here

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