The recent restructuring debt held by the Greek Government has important implications:
a.- The Greek economy can orderly default its privately held debt, without leaving the Euro zone .-
b.- The “ End of the road Dilemma ” for the Greek economy ,either to stay or not in the Euro Zone , from the economics point of view , does not longer exist The Euro Zone offer an umbrella type of framework . Greece on its own, is not capable of getting what it has so far: the expectation that after all things can be better .Moreover, actual Euro zone macroeconomics setting ,has not being designed to overcome the consequences of Greece leaving the Euro Zone.
c.- The substitution between private debt and public debt, does not solve the core of the problem, which is to adjust the country to the reality of being in a zone with severe rules to get the benefits from being part of it.-
d.- The question these days , deals with the willingness of the ruling Government and their politicians , to implement the necessary and proper reforms which are complementary to the successful restructuring debt program of March 8th . Public spending represents 48% of GDP, quite high for a country desperately needed of more private investments which requires modern and efficient public management procedures, to go along before it gets done. Besides, tax evasion practices, make such a spending proportion, a heavy burden for current scarce resources, because it creates a competition with any new resources available, which otherwise have more productive alternatives.
e.- The necessary competitiveness gains to stay within the Euro Zone, might also come from , focusing on what the Greek economy might be better suitable for . Greece has a good quality Human Capital (comparative advantage). Therefore, the Greek economy, should focus its human capital stock, in those sectors with better potential to transform a comparative advantage in a competitive advantage.-
f.- Greece has tourism (18% of GDP), and other sectors which use intensively human capital. High quality Human capital, means higher productivity (the other side of cutting wages).Thus, the Greek economy should pursue a focused strategy on all of those areas with important competitive advantage potential specially those ones related to services.-
Finally, the Greek economy is currently following a path which like a marathon, needs a strategy to look over the burden of debt. The most of the benefits from the proper reforms will be collected, whether those reforms are implemented sooner than later.
