February 6, 2015

Photo credit: Joanna

The newly elected leaders of the Greek government have stood in defiant opposition to the fiscal austerity and regulatory reforms called for by the European Union and International Monetary fund. The economic crisis in Greece is poised to deepen even further, now that the EU has lifted its waiver on Greek government debt as collateral — effectively signaling a green light for a run on Greek banks.

Although the Greek crisis has long been viewed as a standoff between Greek officials and the Eurozone, it appears that the real standoff is between Greece and its potential investors, argues Atlas Network associate Johannes Schmidt in a Sound Money Project analysis.

“To play the game, investors must appear resolute that they will not invest in Greece so long as the conditions are not right, but ultimately be willing to invest in Greece,” Schmidt writes. “They must not ‘blink’ as Greece appears to have done, but rather impress upon Greece that their investments are contingent on long-term structural reforms that make for healthy business environments. Athens must recognize that to save itself from ruin, it must embrace reforms that might be generally unpopular and uncomfortable in the short-term in order to enjoy more wealth and prosperity in the long term.”

Read the full piece, “Greek crisis creates standoff between regulators and potential investors,” at Atlas Network’s Sound Money Project website.

Learn more about the Sound Money Project.