Professor Ted Malloch said Germany was 'freaked out' about the prospect of Greece quitting the euro
Professor Ted Malloch revealed that senior Greek economists have enquired about the possibility of adopting the greenback if the country crashes out of the single currency.
He asserted that Athens is so desperate it is prepared to tie itself to the dollar on the same terms as the likes of Puerto Rico if it means being able to quit the eurozone.
And Prof Malloch said German leaders including Angela Merkel were “freaked out” at the humiliating possibility of losing Greece to a rival currency, which would be a devastating blow to the EU project.
Tying Greece temporarily to the US dollar would be one way for the authorities in Athens to ensure that its currency does not completely tank if it leaves the eurozone, as would likely occur with a reissued drachma.
Greek PM Alexis Tsipras must try to negotiate yet another bailout deal for his country
Prof Malloch said Greece could even turn to the US dollar in the event of a Grexit
However critics may argue the country would be jumping out of the frying pan and into the fire, as it would simply be trading one currency it has no control over for another.
In an explosive interview with a Greek broadcaster Prof Malloch said it would be the best thing for the the country’s people if it quits the eurozone, adding that the current situation is “simply unsustainable”.
He told Skai TV: “I know some Greek economists who have even gone to leading think tanks in the US to discuss this topic and the question of dollarization.
“Such a topic of course freaks out the Germans because they really don’t want to hear such ideas.”
Such a topic of course freaks out the Germans because they really don’t want to hear such ideas
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Prof Ted Malloch
On the ongoing debt crisis, he added: “Greece might have to sever ties and do Grexit and exit the euro. It needs debt restructuring, it really needs debt relief, and I know people in Europe don’t want to hear that.
“They need to reduce the debt overhanging and that means frankly something that people in Germany and elsewhere have not been able to accept, it means a haircut to the lenders and to the banks in Germany and probably, at least in my perspective, a return to the drachma.
“So the problem then is who will manage that transition, and how, to avoid all the chaos and all the instability.”
World leaders are locked in frantic talks over Greece’s finances yet again this month, with the country about to run out of cash unless a fresh bailout package can be agreed.
Previous agreements have required Greece to sign up to devastating austerity measures which have gutted its economy, and have been heavily propped up with German cash.
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But Greece’s debt has now got so huge, and the sense of weariness is so great on both sides of the talks, that there are now fears a deal will not be reached, causing the country to crash out of the euro.
Elsewhere Prof Malloch also expressed his opinion that the new US President will want to seal a trade deal with Britain before the rest of the European Union.
He described negotiations with Brussels on the Transatlantic Trade and Investment Partnership (TTIP) as “literally dead” under Mr Trump’s administration.
And in an interview with Inside US Trade he said a free trade pact with the United Kingdom could be signed, sealed and delivered within a year of negotiations beginning because the countries have so much common ground.