Lapavitsas Calls for Exit as the Only Strategy for Greek People

Lapavitsas says exit is the only option. He may be right, of course, since the European institutions are impermeable to change. Via Real News Network.

Lapavitsas on Greexit

Costas Lapavitsas, who is now a member of parliament for Syriza, on Greexit, which he sees as the best option.

"There are three stages. First, as I said, is the negotiated, consensual, orderly exit. 

Second stage is recovery and that would depend very much on recovery of domestic demand which is very heavily repressed in this country. There are vast resources lying unused. Small and medium enterprises would be reactivated, that’s what would really restart the Greek economy. Not exports - this worship of exports is nonsense. 

But obviously that is not really a path for sustainable growth. What Greece would need after that would be an industrial policy to restructure its productive base, to integrate itself in the world economy on a different basis. That would take a few years. 

But Greece would be still part of a common market, as a member of the EU. So it is not so easy to go back to domestic demand and to the SMEs, because it would have to kick out the big companies that could still sell cheaper.

I believe that Greece could out-compete imports very easily. Unfortunately, wages have been destroyed during the last 5 years due to bailout policies. A devaluation of 15-20% (but no more since as I said the ECB would defend the exchange rate) would give a tremendous competitive advantage. Wages would then gradually rise again."

Read the whole interview here. My guess is he is assuming that it would give competitive advantage to domestic production, and allow for growth without increasing imports too much. Costas seems to be less hopeful about the effects on exports, which would seem reasonable. I would suggest that relying on the exchange rate would not be sufficient, and that some sort of import substitution would be necessary too.

Lafontaine, Flassbeck and Lapavitsas say the euro is over

Earlier this month Oskar Lafontaine, German Finance Minister in 1998-99 and leader of the Social Democrats before Schröder, asked for the break up of the euro. Now in a more substantive paper Heiner Flassbeck, Lafontaine's second in command in the Finance Ministry, and ex-head of the macro division at UNCTAD, together with Costas Lapavitsas, also suggests that the euro should be undone.

From their conclusion:

They don't think the acceleration of political unification would allow the crisis to subside rapidly enough, and eliminating the euro would be the best alternative, or so it seems. Whatever your views, this paper is a must read.