Could Greece ditch the euro?

At the Financial Times, Harvard professor Martin Feldstein argues for letting Greece take a holiday from the euro, allowing it to devalue its currency and ease its severe economic woes. It's a nice idea, but a bit pie in the sky. Barry Eichengreen explains why:

The insurmountable obstacle to exit [is] procedural. Reintroducing the national currency would require essentially all contracts -- including those governing wages, bank deposits, bonds, mortgages, taxes, and most everything else - to be redenominated in the domestic currency. The legislature could pass a law requiring banks, firms, households and governments to redenominate their contracts in this manner. But in a democracy this decision would have to be preceded by very extensive discussion.

And for it to be executed smoothly, it would have to be accompanied by detailed planning. Computers will have to be reprogrammed. Vending machines will have to be modified. Payment machines will have to be serviced to prevent motorists from being trapped in subterranean parking garages. Notes and coins will have to be positioned around the country. One need only recall the extensive planning that preceded the introduction of the physical euro.

The introduction of the euro did require extensive planning -- and extensive costs, costs Greece might not want to pay for. Let's do a bit of back of the envelope math. When the eurozone adopted the physical currency, in 2002, the French bank BNC Paribas calculated the price tag for the switch at 160 to 180 billion euros -- 188 to 212 billion euros today. Greece is about 2.5 percent of the eurozone economy -- so the government might be looking at something like a 4.7 to 5.3 billion euro cost.

That is not much. In fact, it is so little Greece might be able to afford it; the government already needs to borrow 53 billion euros to service its debt this year. But that doesn't include the dramatic cost to businesses, individuals, and banks, or the political and plenary trouble of executing such a maneuver. Alas, Feldstein's is a nice idea, but not one I see working.



Avatar: an all-purpose allegory

James Cameron's sci-fi epic Avatar has becoming something of a political rorsarch test around the world. The story of the alien Na'avi's struggles against the invasion of Earth's military-industrial complexhas taken on some surprising allegorical means for movements around the world:

  • Palestinian protesters in the town of Bilin dressed up as Na'avi recently to protest the Israeli occupation of the West Bank.
  • Bolivia's leftist President Evo Morales has praised Avatar as a "profound show of resistance to capitalism and the struggle for the defense of nature."
  • Chinese bloggers have compared the film's story to the exploitation of Chinese citizens by government-backed real estate developers -- a factor that may have contributed to the film being pulled from Chinese theaters.  
  • Activists ran ads in the Hollywood newspaper Variety comparing the Na'avi to India's forest-dwelling indigenous tribe, the Dongria, whose territory is now threatened by a planned bauxite mine.
  • Environmentalists Lori Pottinger compared the story of Avatar to the Brazilian government's plans to build dams in the Amazon Basin.
  • Russian Communists described the film as an attempt to justify Barack Obama's Nobel Peace Prize. 
  • New York Times columinist Ross Douthat called the movie "an apolologia for pantheism."
  • David Boaz of the libertarian Cato Institute says the movie is about "defending property rights".
  • Last but not least, Cameron himself says the movie is an allegory about the U.S. war on terror

Personally, the movie struck me as a critique of counterinsurgency: the humans talked a good game about cultural understanding and minimizing civilian casualties to reassure the folks back home, but they were really just on Pandora to conquer and exploit.

Then again, it could have just been a movie about aliens.

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