IF the EU wont do wealth transfers like the USA does with its ailing states, then Greece must be encouraged to safe herself:
Greece needs to slash its imports, start earning money. It may be able to do this by creating a trade barrier.
Get its loans, re-issue a new currency, the dracma.
Pay its public sector workers in dracmas with a 1:1 conversion ratio with the € but with a comission of 5% on conversion from dracma to €, 0% conversion from € to dracma- to prevent government losing from a mass exchange.
Stage 1) re-introduction of new-old currency.
there is an assumption that people will not convert all of their dracma's over to € and instead the new-old currency will begin to circulate with the economy. Not being a valid currency abroad, this will encourage a rise of domestic production to replace imports.
State 2) Harden the currency with energy backed reserve, switch from a 1 dracma = 1 € peg to 1 dracma = quanity of ethanol purchased with €1 in year 2012
Stage 3) in exchange for ethanol, Greece will issue Dracmas in exchange for supplied ethanol, thus enabling Greece to print new money in a controlled manner that will have a recognisable hard value on the international market (its a promise to pay in kind, ethenol, which has a value to industrial processes globally)
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Ethanol has a clear market value, the state will be able to purchase euros from biofuel production or else provide heavy industry with free energy (an attractive subsidy in kind) which ought to attract inward investment.
stage 2 and 3 work only if its possible for greece to create viable bioethanol production... ...but greece is quite good at agriculture so should manage. These stages might not be necessary, The purpose of hardening the currency is to give greece international influence in its negotiations.
But greece must end the effective, Voluntary Taxation system they have.
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other ideas.. ..On all savings over X amount in dracma accounts have negative interest rates to devalue savings. This would have different benefits.
1) boost gdp by accelerating velocity of money.
2) act as a defacto tax: which the gov needs since it is historically incapable of imposing taxation.
3) pressure to accelerate the use of the new dracma would encourage its rapid voluntary adoption in preference to the prevailing €
