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

Even economists with sympathy for Greece's cause, like the Nobel-Prize winning Paul Krugman, have expressed some dismay at the Tsipras government's handling of the crisis.

"They thought they could simply demand better terms without having any backup plan," Krugman told CNN's Fareed Zakaria. "So, certainly this is a shock."

"But, you know, in some sense it's hopeless in any case ... I mean, the new terms are even worse, but the terms that they were being offered before were still not going to work. So, I, you know -- I may have overestimated the competence of the Greek government."

Varoufakis said he agreed entirely with Krugman, "however shocking that may sound to you."

"It's not true we did not have a Plan B. We had a Plan B."

"We, in the Ministry of Finance, developed it. Under the egis of the Prime Minister, who ordered us to do this, even before we came in the Ministry of Finance."

"Of course, you realize that these plans -- Plan Bs -- are always, by definition, highly imperfect, because they have to be kept within a very small circle of people, otherwise if they leak, a self-fulfilling prophecy emerges."

That plan, he said, was not for Greece to leave the Eurozone, a Grexit, but rather for the government to create "euro-denominated currency" -- in other words, for the government to print its own, temporary currency, pegged to the value of the euro.

The date 23 April 1985 was a momentous day in the life of the Coca-Cola corporation. For years, the company had been planning a new drink to see off the challenge from Pepsi. There was no expense spared for Project Kansas.

“New” Coke (as it was dubbed) bombed. The company responded with alacrity. It didn’t say consumers were wrong. It didn’t say that given time New Coke would be a success. It didn’t plough on simply because it had invested heavily in Project Kansas. Instead, it recognised that there was only one option: to go back to the traditional formula. This returned to the shelves on 11 July 1985, within three months of “New” Coke’s launch.

There is a lesson here for both businesses and policymakers – and European policymakers in particular. Sixteen years after its launch, it should be clear even to its most die-hard supporters that the euro is New Coke.

The Greek newspaper To Vima reported earlier this week that Tsipras had asked Putin for a $10 billion loan so that Greece could transition back to the drachma. If it reintroduced the national currency, it would need foreign reserves to back it up, and Greece was out of euros. According to the report, Russia floated the idea of a $5 billion advance on the construction of a gas pipeline through Greece, a branch of the Turkish Stream project that Russia and Greece agreed to build in June.

To Vima is a reputable newspaper with good political sources, so 17 legislators from the opposition New Democracy party have officially asked Tsipras whether the report was true. The prime minister probably will deny it, as the Kremlin did Wednesday. Putin's press secretary, Dmitri Peskov, told the news agency Interfax that "the Greek leadership never asked Russia for help." Still, if the report were true, it would tie up a few loose ends.

In terms of foreign policy, Germany rebuilt trust by embracing Western integration and Europeanization. The power at the center of Europe should never again become a threat to the continent or itself. Thus, the Western Allies' aim after 1945 -- unlike after World War I -- was not to isolate Germany and weaken it economically, but to protect it militarily and firmly embed it politically in the West. Indeed, Germany's reconciliation with its arch-enemy, France, remains the foundation of today's European Union, helping to incorporate Germany into the common European market, with a view to the eventual political unification of Europe.

But in today's Germany, such ideas are considered hopelessly "Euro-romantic"; their time has passed. Where Europe is concerned, from now on Germany will primarily pursue its national interests, just like everybody else.



But such thinking is based on a false premise. The path that Germany will pursue in the 21st century -- toward a "European Germany" or a "German Europe" -- has been the fundamental, historical question at the heart of German foreign policy for two centuries. And it was answered during that long night in Brussels, with German Europe prevailing over European Germany.

This was a fateful decision for both Germany and Europe. One wonders whether Chancellor Angela Merkel and Finance Minister Wolfgang Schäuble knew what they were doing.
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The foundation of the second, unified German nation-state in 1989 was based on Germany's irrevocable Western orientation and Europeanization. And the Europeanization of Germany's politics filled -- and still fills -- the civilization gap embodied in German statehood. To allow this pillar to erode -- or, worse, to tear it down -- is a folly of the highest order. That is why, in the EU that emerged on the morning of July 13, Germany and Europe both stand to lose.

Moreover you clearly haven't considered the consequences of yet another bailout for the Greeks. Spain would have been next in evicting a reform government and undoing the recovery now underway. That would have soon enough would required far more money from an EU that could sustain. Then the Italians, and then ......

You may believe that, but many others don't. You can't forsee the future anymore than can others., and your categorical statements are very far from self evidently true.

Actually I do foresee the future fairly well, the ability to do so is a by product of education, and I am much better educated than most.

Despite all the broken promises, despite the "no" vote on the austerity diktat that Tsipras would transform into a "yes" vote only a few days later, like some magician pulling a rabbit out of the hat, surveys showed 70 percent of Greeks supporting the deal, which they consider to be "necessary and without alternative." Sixty-eight percent say they would vote for Tsipras again if there were new elections. Polls also suggest he would be able to govern without a coalition partner.

Those are astonishing figures for a prime minister under whose watch the banks had to be shuttered because they were threatened with collapse. Under whom capital controls had to be introduced, limiting daily withdrawals by Greeks to €60. Furthermore, the Greek economy hasn't been in this bad a shape at any other point since the start of the crisis five years ago. After one and a half years of consolidation, the economy has fallen back into recession and is shrinking rapidly.

Tsipras' Masterpiece

The fact that he isn't being loudly criticized and that he managed to get 61 percent of Greeks to back him in the July 5 referendum is Tsipras' political masterpiece. He had pitted "democracy against the Troika" as he often stated. It was a demonstration of power and at the same time a slap in the face of the Europeans. It's possible they underestimated Tsipras because he had always come across as being so polite and reserved. But Tsipras also tested the limits and had no qualms about crossing the line.

"The Greek people will defend themselves against an ultimatum with a big no," he announced prior to the referendum. At the same time, he said, this no would also be a "big yes to European solidarity." These kinds of dialectics might be difficult for officials in Brussels to understand, but the Greeks clearly comprehend them. In any case, Tsipras was able to take the defiant no of his compatriots to increased austerity and, despite this breathtaking turn-around, turn it into a yes within a week without being written off as traitor.

Greece is going to fall apart. This is going to be a problem for those who still have EU dreams.

Germany is going to be seen as clubbing Greece to death. THis will have consequences.

Friends were just in Greece. Almost couldn't get back on the weekend.

SkyGreece Airlines is blaming the Greek economic crisis as well as technical issues with its only plane, which remains parked at Pearson in Toronto, according to airport officials.

Last week passengers were left waiting four days in Toronto for their flight to Athens. This week the flight was cancelled completely without warning.

Passengers say there’s been no communication, and that after one night they were forced out of their hotels because SkyGreece was no longer paying the bill.

[...]
Employees from SkyGreece were nowhere to be found. And countless attempts to phone the company’s Athens office went unanswered.

More than a day later, dozens of stranded passengers turned to social media to vent their frustration and Despina reached out to one of the founders, Fr. Nicholas Alexandris, via Facebook messenger. The priest respond, telling Despina that he resigned from the board two weeks ago and offered the phone number of the “main shareholder” and “president” Mr. Ken Stathakis.

Good post, george; when there are so many variables that's in flux, it's impossible to predict.

Greece - Economic forecast summary (June 2017) After a prolonged depression, the economy stabilised in 2016 and GDP is projected to grow by 1.1% in 2017 and 2.5% in 2018. The labour market is improving, supporting private consumption, and higher demand from abroad is boosting exports.
Greece - Economic forecast summary (November 2017 ...
www.oecd.org/eco/outlook/greece-economic-forecast-summary.htm