Last updated 7/6/2015.
Paul Krugman’s commentaries on Greece have been consistently sensible. From his latest, Ending Greece’s Bleeding:
Imagine, for a moment, that Greece had never adopted the euro, that it had merely fixed the value of the drachma in terms of euros. What would basic economic analysis say it should do now? The answer, overwhelmingly, would be that it should devalue — let the drachma’s value drop, both to encourage exports and to break out of the cycle of deflation.
Yup. It worked for Iceland in 2008-9. It might have worked for Greece too but, as they don’t control their own currency, going the devaluation route wasn’t an option for them.
It makes no sense to be locked in to a currency if you lack political authority to control it, e.g., to print more when the situation demands it, issue bonds when appropriate, etc. It makes no sense to agree to debt payment terms if there is no rational basis for believing they can be met. Given those things, “No.” was the right choice in Greece’s referendum today. Vote to reject the raw deal.
Joseph Stiglitz called out the anti-democratic nature of the “troika’s” demands the other day in Europe’s Attack on Greek Democracy.
In an interview on NPR Brown Univ. economist Mark Blyth calls bullshit on the suggestion that the Greeks have profligate spenders or are just lazy, The (Perceived) Tragedy of Greece.
(If you’re only going to read or listen to one piece, listen to Blyth.)
Background reading:
- Paul Krugman (NYT), Greece Over the Brink
- Paul Krugman (NYT), The Awesome Gratuitousness of the Greek Crisis
- Anil Kashyap, A Primer on the Greek Crisis: the things you need to know
- The Economist, The treasures of darkness [Ed.: From late 2014]
- James Walsh, Is the Greek economy improving? [Ed.: Also from late 2014]
- Steve Randy Waldman, Greece
And an excellent observation by Thomas More on DeLong’s blog:
Why hasn’t anyone pointed out that the current Greek “crisis” is nothing but Naomi Klein’s shock doctrine AKA disaster capitalism? [Ed.: Link added.]
STEP 1: Create an artificial financial crisis (sometimes requires a military invasion, as in Iraq 2003; but can also be accomplished by loaning unrepayable money, as in Greece 2010, or changing bankruptcy laws to make getting out of debt impossible, as in America 1998).
STEP 2: Use the financial crisis as an excuse to ram through economic “emergency measures” which systematically dismantle the social safety net and set off savagely regressive crony capitalism looting sprees to strip-and-rip the entire society of its saleable assets via legalized control fraud.