Is Greece going to set off the long feared next wave of the Great Recession?

The particular terms offered to them may not be the right ones, but even the right deal would have involved considerable austerity. If I went $50,000 in debt, I would have to be very frugal for a long time to recover. That's just common sense. Also, people should repay what they borrow, if they want to be treated like adults.

Brandon9000 wrote:

The particular terms offered to them may not be the right ones, but even the right deal would have involved considerable austerity. If I went $50,000 in debt, I would have to be very frugal for a long time to recover. That's just common sense. Also, people should repay what they borrow, if they want to be treated like adults.

That is what bankruptcy law is designed for, to make you deal with appropriate austerity while allowing you the chance to move on from your debt situation. Usually there is a lot of forgiveness of debt to make this happen. What we are doing to the Greeks is more in line with debtors prisons....."pay your bills in full or else we will hurt you!"

Which approach represents civility?

The world just doesn't owe Greece a living.

Quote:

The world just doesn't owe Greece a living.

We owe greece acknowledgment of their humanity, that they as we are not perfect, and there has to be limits to the amount of pain that we inflict upon others in the attempt to teach them a lesson.

There are multiple reports from Germany of a sense of glee that it looks like Greece is about to melt down, that humanitarian aid will soon need to be sent in order to keep the greeks alive to suffer the pain that they have brought upon themselves. That is barbaric. That is wrong. All decent people must object.

Also, people should repay what they borrow, if they want to be treated like adults.

Dont tell me you expect to save Europe simply by imposing rules of sound management. no one is more committed than I to respecting the equilibrium; it is what has always drawn us closer together. But you have to build this respect through democracy and dialog, through reason, and not by force.

There’s a bit of a lull in the news from Europe, but the underlying situation is as terrible as ever. Greece is experiencing a slump worse than the Great Depression, and nothing happening now offers hope of recovery. Spain has been hailed as a success story, because its economy is finally growing — but it still has 22 percent unemployment. And there is an arc of stagnation across the continent’s top: Finland is experiencing a depression comparable to that in southern Europe, and Denmark and the Netherlands are also doing very badly.

How did things go so wrong? The answer is that this is what happens when self-indulgent politicians ignore arithmetic and the lessons of history. And no, I’m not talking about leftists in Greece or elsewhere; I’m talking about ultra-respectable men in Berlin, Paris, and Brussels, who have spent a quarter-century trying to run Europe on the basis of fantasy economics.

To someone who didn’t know much economics, or chose to ignore awkward questions, establishing a unified European currency sounded like a great idea. It would make doing business across national borders easier, while serving as a powerful symbol of unity. Who could have foreseen the huge problems the euro would eventually cause?

Actually, lots of people. In January 2010 two European economists published an article titled “It Can’t Happen, It’s a Bad Idea, It Won’t Last,” mocking American economists who had warned that the euro would cause big problems. As it turned out, the article was an accidental classic: at the very moment it was being written, all those dire warnings were in the process of being vindicated. And the article’s intended hall of shame — the long list of economists it cites for wrongheaded pessimism — has instead become a sort of honor roll, a who’s who of those who got it more or less right.

The only big mistake of the euroskeptics was underestimating just how much damage the single currency would do.

The point is that it wasn’t at all hard to see, right from the beginning, that currency union without political union was a very dubious project. So why did Europe go ahead with it?

Mainly, I’d say, because the idea of the euro sounded so good. That is, it sounded forward-looking, European-minded, exactly the kind of thing that appeals to the kind of people who give speeches at Davos. Such people didn’t want nerdy economists telling them that their glamorous vision was a bad idea.

Indeed, within Europe’s elite it quickly became very hard to raise objections to the currency project. I remember the atmosphere of the early 1990s very well: anyone who questioned the desirability of the euro was effectively shut out of the discussion. Furthermore, if you were an American expressing doubts you were invariably accused of ulterior motives — of being hostile to Europe, or wanting to preserve the dollar’s “exorbitant privilege.”

And the euro came. For a decade after its introduction a huge financial bubble masked its underlying problems. But now, as I said, all of the skeptics’ fears have been vindicated.


Furthermore, the story doesn’t end there. When the predicted and predictable strains on the euro began, Europe’s policy response was to impose draconian austerity on debtor nations — and to deny the simple logic and historical evidence indicating that such policies would inflict terrible economic damage while failing to achieve the promised debt reduction.

It’s astonishing even now how blithely top European officials dismissed warnings that slashing government spending and raising taxes would cause deep recessions, how they insisted that all would be well because fiscal discipline would inspire confidence. (It didn’t.) The truth is that trying to deal with large debts through austerity alone — in particular, while simultaneously pursuing a hard-money policy — has never worked. It didn’t work for Britain after World War I, despite immense sacrifices; why would anyone expect it to work for Greece?


What should Europe do now? There are no good answers — but the reason there are no good answers is because the euro has turned into a Roach Motel, a trap that’s hard to escape. If Greece still had its own currency, the case for devaluing that currency, improving Greek competitiveness and ending deflation, would be overwhelming.

The fact that Greece no longer has a currency, that it would have to create one from scratch, vastly raises the stakes. My guess is that euro exit will still prove necessary. And in any case it will be essential to write down much of Greece’s debt.

But we’re not having a clear discussion of these options, because European discourse is still dominated by ideas the continent’s elite would like to be true, but aren’t. And Europe is paying a terrible price for this monstrous self-indulgence.

Krugman joins the list of those who have concluded that the current greek government has been amature hour. He as well as I are both shocked and disappointed that there never was the planing to put in a new currency if need be.

Who are the "many of us" for whom you presume to speak?

What was the evidentiary or logical basis on which you presumed the then recently elected Syriza party had already created and executed a plan for an immediately available replacement currency, should their amaterurish and obviously ill-conceived plan fail?

I think you are indulging in a bit of pretentious, self-serving bullshit here.

Pissing off your adversaries is sometimes a very good plan. Look how well Osama did with that plan on 9/11 for instance. But the point is to get the other side to do something stupid, which is usually over react. I said at several points that it looked like the Greek government was working to move the greeks to a point where they would agree to let the Euro go for their own good. That would have been a plan, maybe a good plan. But that is not what they were doing. Now it is not clear what they traded trust with the europeans and something like 50 billion euro bled during the bank run for. Trading it for moving the people in the direction that they needed to go, still need to go, might have been worth it. But what did they get?

I think you are indulging in a bit of pretentious, self-serving bullshit here.

You suck at insults, so how about just sticking to the topics MKay?

The economic appetite of Greeks far exceeds what they can support through tourism alone

As Ioannides told me, “We know from looking at other countries that, for reform to work, the government and the public really need to own it.” Right now, no one in Greece really owns reform.

Still, Tsipras has considerable political capital. He could use that capital to spend the rest of his time in office inveighing against austerity. But Germany has made it painfully clear that that will have no effect.

Instead, Tsipras should forget about what Europe isn’t going to do, and focus on what Greece can do for itself.

He should make the case for why Greece needs to focus on exports; make it easier for young people to find jobs and start businesses; and even allow loaves of various weights and liberalized gyms. This isn’t the platform that Tsipras ran on. But it’s the platform that Greece needs him to govern on.

He should make the case for why Greece needs to focus on exports; make it easier for young people to find jobs and start businesses; and even allow loaves of various weights and liberalized gyms. This isn’t the platform that Tsipras ran on. But it’s the platform that Greece needs him to govern on.

save only his reluctant acquiesence to the (very reasonable and necessary) EU demand,s