The current crisis in Greece is due to the fact that the country is plagued by a structurally weak economy. That simply means that the Greek economy is highly volatile and unstable, lacks a viable means to pursue steady economy growth and suffers exaggerated effects from jolts in the market and other negative phenomenon. Put another way, if the EU sneezes, Greece doesn't just get a cold...it gets pneumonia! But there is a way out and this crisis presents an opportunity.
One economist, Professor Marie Christine Duggan, offers a solution based on traditional Keynesian approaches to global trade imbalances. Since Greece's main problem is one of a balance of trade deficit within the EU, particularly with Germany, she suggests that,
"...creditors could promise to spend the money they receive from Greece (in the form of debt service payments) on Greek imports or on long-term for-profit investments in Greece. This third way involves re-aligning institutional incentives so that the creditors only gain when the debtors themselves grow."
Sounds like a great alternative to either of the other two disasters like allowing a default to rock the global banking system to its very foundations or an austerity plan that starves the people to feed the rich. And it will probably work!
