July 4, 2015 11:45am by David Farrar

Greece should vote no and leave the Euro

Thousands of Greeks staged rival rallies on Friday (Saturday NZ time) ahead of a weekend referendum that may decide the country’s future in Europe’s single currency, with polls showing voters almost evenly split.

At least 20,000 people turned out at each rally, at the end of a week of high drama following the government’s rejection of an aid deal with international creditors and the closure of banks.

With Greeks asked to decide whether to accept or reject the tough terms of the bailout, three opinion polls had the ‘Yes’ vote narrowly ahead; a fourth put the ‘No’ camp 0.5 percent in front, but all were well within the margin of error.

Will the polls be right?

Prime Minister Alexis Tsipras exhorted Greeks to reject the deal, dismissing warnings from Greece’s European partners that to do so may see the country leave the euro zone, with unforeseeable consequences for Greece, Europe and the global economy.

In a televised address, Tsipras said a report by the International Monetary Fund which argued that Greece’s massive public debt could not be sustained without significant writedowns vindicated his advice to reject the lenders’ terms.

Repeating his assault on European partners he accused of blackmailing and issuing ultimatums to Greece, the leftist leader called for calm ahead of Sunday’s ballot.

“On Sunday what is at stake is not Greece’s membership of Europe, what is at stake is whether blackmail will lead us to accept the continuation of a policy which the lenders themselves recognise is a dead end,” he said.

“On Sunday what is at stake is whether we will give our consent to the slow death of the economy.”

Tsipras is lying. If Greece votes no, they will leave the Euro and possibly the EU.

But they should leave the Euro. Monetary union only really works if you have fiscal union also. If they accept the bailout terms, they will get some debt written off, but they will be struggling for decades to come. Sometimes it is better to go bankrupt, and start new.

So they shouldn’t vote No so they get better terms from the IMF and others. They won’t. They should vote No to go bankrupt, and start afresh with a new currency.