It is about time leaders of the Eurozone take a page out of the American economic playbook and follow through with policies of stimulus concerning Greece. Needless to say, advancements on that front have started to take place after ECB's President, Mario Draghi, enacted a €1.1tn stimulus/Quantitative Easing (QE) programme which he hopes will put Europe back on track. Of that gargantuan amount of capital, Greece will not be seeing any of it, in large part due to restrictions on how much debt the central bank can buy from a single issuer. However, there is a chance that in the near future, the ECB could begin buying Greek bonds before hitting the limit of holding a third of a country's debt once more. Nevertheless, the amount Greece would receive would be meaningless and be too little for the country to regain market access. While Greece will be deprived of the much-needed stimulus money, the broader European economy is set to see a jump of 0.3% in real GDP to 1.7% in 2016 from 2015, according to the ECB. After coming up with a deal with the country, the Eurozone forced even harsher measures on Greece, following through with the same policy of Herbert Hoover economics (props to Mr. Dukakis) that has, in-effect, ruined the country and led its people to despair.
While the United States did, to a certain degree, avoid a total collapse of its economy in the wake of one of the world's worst financial crises thanks to a series of fiscal stimuli employed to act as a 'moat' and boost growth, Greece has wholly been left scathed because of austerity measures - which had been proven perilous in the United States in the past - imposed on it by the European Union.
Below, I outline what I think would be the best method of using a distinct form of stimulus package. Although it does not conform to the exact definition of a stimulus package, which typically involves extra spending on the part of the government to boost growth, the idea outlined below presents a more pro-active and low-cost solution to the crisis.
Following the near-collapse of Greece's economy and subsequent fear that the country would exit the Eurozone, businesses in Greece suffered from many angles. Not only did financing and business activity slow down dramatically as credit froze and investment funds exited the market, but Greek businesses also lost a tremendous amount of credibility in the eyes of the international community. This has been a severe deterrent for young Greeks considering careers as entrepreneurs and job creators. Therefore, a key focus should be on promoting entrepreneurship and innovation in the country. The simplest way of doing this would be to establish a financing vehicle that mimics the structure of a typical venture-capital fund.
A similar initiative was undertaken by the Libra Group in creating the "Hellenic Innovation Award", a €1 million yearly fund that awards interest-free loans to small businesses in Greece. This endeavour has been so successful that, every year, the amount invested in the fund grows marginally. Regardless, the amount is too meagre as to create an entrepreneurial "spark". On a broader level, the European Union established the "European Investment Fund", a €3 billion fund that acts as a subsidiary of the European Investment Bank and invests in European SMEs, with UK and German companies being the prime recipients. As in the case of the Hellenic Award, the amount finally portioned to Greek entrepreneurs is insignificant.
An investment fund or loaning mechanism would be a tremendous encouragement to Greeks who are trying to launch their own small businesses. Similarly to the United States, where 3 million jobs are created annually by start-ups, according to a 2010 report by the Kauffman foundation, Greece can definitely benefit from a surge in job creation - given that youth unemployment stood at roughly 52% in June of 2015. Naturally, the investment fund would need to be considerable in size to truly make a splash, ranging anywhere from €50 million to €500 million. It could either invest based on equity or debt, although the European business environment tends to advocate for debt over equity. Furthermore, as in the case of Libra Group's fund, loans should be on favourable terms for the entrepreneur, ideally with no interest rates.
There is no doubt that such a fund would need to be heavily promoted to encourage as many Greeks as possible to join the entrepreneurial push. In cooperation with the Greek government, with already-established Greek entrepreneurs as well as with Greek-American business leaders, this fund could be a prodigious achievement that could once and for all, provide the people the opportunity to save their country's economy.