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Dear Greece: Be careful what you wish for

Jim Boulden, London (CNN):   Hello, Greece.The world is again focusing on you. The economic pain and social unrest has rightly made voters and politicians the world over debate austerity, growth and structural reform.

What you are going through has made it clear that austerity is not an easy solution.

You, the Greek people now have a chance to do something I suspect millions in Europe would dearly love to do – vote on whether to leave the euro. That is what June 17 will now be about, because there will be massive pain for you, Greece, if you stay with the economic reforms, and even more pain if you reject the loans from Europe and the International Monetary Fund. Pain either way.

I have been resisting talk about Greece leaving the single currency given there is no firm, clear, legal way for you to exit, or be kicked out. It could very well happen.

I keep reading that most of you want to stay in the euro and the young people I have personally spoken to on the streets in Athens have told me: ” We are European and we barely remember the drachma, why would be want to go back to it?”

But that does not seem to matter. Analysts are talking about it, politicians are talking about it and business is preparing for it.

Might it become a self-fulfilling prophecy?

The recent market gyrations are all being blamed on Greece, unfairly in my mind. Falling U.S. oil prices, sputtering Spanish banks, falling European Union industrial production, softening Chinese and Indian markets have little to do with Greece. The recent fall in the euro has been tied to Greece but that has been orderly, so far.

But Greece brings back into focus where we are. The euro crisis never really ended and fears of global recession are back.

You, the Greek voter, have a big decision to make. Yes, you will vote for the party or leader of your choice. But it will have a much bigger impact than the austerity versus growth debates. Greece has for too long fudged the books and not reformed its economy which many other European countries have.

Bottom line: It isn’t great but I can’t see how you can have it both ways, no matter how much we all wish you could.

So, read carefully all the predictions of what will happen to your economy if you stop negotiating with those who are paying your bills.

I still wonder if European leaders and the International Monetary Fund will give you, Greece, more breathing room as long as those whom you ultimately put into power pledge to continue to work with the international lenders.

You must be asking the same questions.

But remember, if the lenders give you, Greece, more time, it means you will have to pay back even more money, pay even more interest on even more loans that will surely be needed to cover budget shortfalls if reforms are slowed. You will need more international money, not less.

Is that more preferable to your banks collapsing, your borders being blocked to keep the currency being shipped out, and potential serious social unrest?

I leave you with this, Greek voters. Very few countries have fallen behind on their payments to the IMF. There are only three – Somalia, Sudan and Zimbabwe, according to the IMF itself.

So, Greek people, is that a list you want to be attached to?



Published Date: Thursday, May 17th, 2012 | 09:07 AM

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