June 25, 2015

Poor Greece is squeezed between a bad regulators’ rock and a leftist-ideological-blocking hard place.

Sir, Mark Mazover writes about “A last chance for Tsipras to choose country over party” June 25.

In it the Professor refers to “the country’s sky-high unemployment rates” and to “Greek banks on life support”.

That would call for two things:

First the elimination of the credit risk weighted capital requirements for banks which effectively blocks the fair access to bank credit of those perceived as “risky”, like the SMEs who could most help to generate sustainable jobs.

Second, something like Chile’s capitalization of its banks during the 1982-83 crisis, by purchasing their non-performing loans, in the understanding that these loans would be re-purchased by the banks before their dividend payments could resume.

But to get bank regulators, like the former Chair of the Financial Stability Board, Mario Draghi, to admit how wrong they have been is no easy task.

And to get Tsipras and Syriza, to back a plan executed during the Pinochet regime, that is no easy task either.

In my opinion, without doing both those things the chances of Greece recovering in a foreseeable time are nil. But, for Greece to get out of this trap between a rock and a hard place, would require some real strong leadership, from Greece and from Europe.