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> On Apr 20, 2015, at 11:47 AM, raghu <[email protected]> wrote: > > Krugman seems pessimistic on Greece. He may be right. The Eurocrats' behavior > towards Syriza suggests that they are preparing a Lehman moment with Greece: > make a harsh example of them, but then execute an aggressive and generous > bailout for Spain and the others. > > http://www.nytimes.com/2015/04/20/opinion/paul-krugman-greece-on-the-brink.html > ----------------------snip > It has been an endless nightmare, yet Greece’s political establishment, > determined to stay within Europe and fearing the consequences of default and > exit from the euro, stayed with the program year after year. Finally, the > Greek public could take no more. As creditors demanded yet more austerity — > on a scale that might well have pushed the economy down by another 8 percent > and driven unemployment to 30 percent — the nation voted in Syriza, a > genuinely left-wing (as opposed to center-left) coalition, which has vowed to > change the nation’s course. Can Greek exit from the euro be avoided? > > Yes, it can. The irony of Syriza’s victory is that it came just at the point > when a workable compromise should be possible. > > The key point is that exiting the euro would be extremely costly and > disruptive in Greece, and would pose huge political and financial risks for > the rest of Europe. It’s therefore something to be avoided if there’s a > halfway decent alternative. And there is, or should be. > > By late 2014 Greece had managed to eke out a small “primary” budget surplus, > with tax receipts exceeding spending, excluding interest payments. That’s all > that creditors can reasonably demand, since you can’t keep squeezing blood > from a stone. Meanwhile, all those wage cuts have made Greece competitive on > world markets — or would make it competitive if some stability can be > restored. > > The shape of a deal is therefore clear: basically, a standstill on further > austerity, with Greece agreeing to make significant but not ever-growing > payments to its creditors. Such a deal would set the stage for economic > recovery, perhaps slow at the start, but finally offering some hope.But right > now that deal doesn’t seem to be coming together. Maybe it’s true, as the > creditors say, that the new Greek government is hard to deal with. But what > do you expect when parties that have no previous experience in governing take > over from a discredited establishment? More important, the creditors are > demanding things — big cuts in pensions and public employment — that a newly > elected government of the left simply can’t agree to, as opposed to reforms > like an improvement in tax enforcement that it can. And the Greeks, as I > suggested, are all too ready to see these demands as part of an effort either > to bring down their government or to make their country into an example of > what will happen to other debtor countries if they balk at harsh austerity. > _______________________________________________ > pen-l mailing list > [email protected] > https://lists.csuchico.edu/mailman/listinfo/pen-l
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