Monday, April 20, 2015

SYRIZA - Heed Prof. Krugman's Recommendations!

What a pleasant new discovery to read articles/blogposts by Prof. Krugman which I can agree with! After his visit to Greece, Prof. Krugman first posted quick Notes on Greece and then a more lengthy analysis Greece on the brink. If no one else can, perhaps Prof. Krugman can convince the Greek government that 

"Greece does not, in fact, face a solid bloc of implacable creditors who would rather see default and exit from the euro than let a leftist government succeed, that there’s more good will on the other side of the table than many Greeks suppose".

If only the Greek government would get around to seeing things this way! Then they might be able to conclude that 

"if Greece can negotiate a halfway reasonable compromise, one that more or less pauses further austerity, it’s hard to see that the risks of exit would be worth it. And the creditors would be equally well served by such a compromise".

Prof. Krugman reminds the Greek government 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 Prof. Krugman concludes that such a halfway decent alternative is there. It's called compromise on both sides instead of blackmail "to blow the whole thing up" (FinMin Varoufakis).

If the neo-Keynesian Prof. Krugman cannot convince the Greek government, no one else will be able to.


  1. Krugman will have no effect, not only because Syriza's hidden agenda is independence and respectability by Grexit, but also because the European politicians can no longer sell their voters the idea that more money must go towards Greece.


  2. No one will.
    This Greek government is deaf for reasonable thoughts and ideas. They even see this kind of thoughts, that have been published already in Greece itself by Greeks, as anti propaganda.

    I wish EU courage. The same courage as all had who went for the first time into unknown directions: like astronauts, and much earlier all who went by boat or ship beyond the horizon: all people believed that they would fell off earth and disappear in the unknown deep down under. They did not.

    Those who do believe that all will go wrong with EU without Greece are missing the courage of the Big Names on earth, and of a lot of nameless, living their lives in dignity and harmony, with hardly some materialistic possession, but with the fair proud of contentment, not affected by greed.

    Whatever it might bring: I prefer to be on that boat or space ship to find new possibilities, more, than to agree with a government in Greece that will demolish the entire EU after having demolished Greece.

  3. "if Greece can negotiate a halfway reasonable compromise ..."

    I am afraid that the Greek government does not consist of reasonable people, but of activists and ideological fanatics.

    Some of them have been activists like Tsipras, people who never liked to back down. Others have been academics, who are simply and totally convinced of their arguments.

    Ideological fanatics are in a way like religious fanatics who rather face death or commit suicide - or a grexit - than to compromise with their belief, and who do not care if they take with them their congregation or country.

  4. Interestingly even Wolfgang Münchau, who previously has argued like Paul Krugman for a new "haircut" for Greece, now voices rather sharp criticism against the Greek government and particularly also against Varoufakis. His article in Der Spiegel today has the heading

    "The Greeks have no Plan B - and no plan A"

    "Greece lurches towards the abyss, and the Minister of Finance waste the time of his audience [in Washington] with theoretical teaching."

    If H. Trickler is right they had of course a Plan A all the time, but would a Grexit really lead to independence and respectability?

  5. @AnonymousApril 20, 2015 at 8:41 PM

    How can you doubt that Grexit immediately puts Greece on it's own feet, without having to ask the EU, without control of the troika and so forth.

    It may be a rough start and a tough period, but I am convinced that many Greeks will think "Better to have hard times but be independent again"

    And btw., ex French president Giscard d'Estaing said in an interview to

    La Grèce ne peut régler ses problèmes aujourd’hui que si elle
    retrouve une monnaie dévaluable. Il faut donc envisager ce scénario très calmement, à froid, dans l’intérêt de
    la Grèce elle­même. Il est absurde de dire qu’il s’agirait d’un échec de l’Europe.

    D’ailleurs, ces jours derniers, la cote de l’euro est remontée. La Grèce a toute sa place dans l’Union européenne. En quittant l’usage de l’euro, elle ne ferait que rejoindre des pays comme le Royaume­Uni, la Suède, la République tchèque etc. qui ne l’ont pas adopté. Mieux : cette sortie lui permettrait de préparer un éventuel retour, plus tard.

    Ce processus de sortie ordonnée doit et peut se dérouler de manière non conflictuelle, dans l’intérêt mutuel de chacun. C’est ce que j’appellerais une « friendly exit », une sortie dans un esprit amical. La Grèce a besoin de se donner la possibilité de dévaluer sa monnaie. Si elle ne le faisait pas, sa situation s’aggraverait et déboucherait sur une crise encore plus sévère.

    Abbreviated: The EU should have found a friendly way to allow Grexit, and it is absurd saying that Grexit is a failure.


  6. Financial Times April 19, 2015 by Chris Giles:
    "How to deal with a problem child like Greece

    Never in the history of the eurozone has the eurogroup been so united. Never have the institutions formerly known as the troika — the European Commission, the International Monetary Fund and the European Central Bank — had such a common purpose. Whether by design or by accident, the Syriza government led by Alexis Tsipras has achieved more European harmony than a collection of continental choirs singing Ode to Joy."

    I am fully convinced that the hidden agenda of Syriza will soon be realized. Eurogroup will say 'it was unacceptable' and Syirza will say 'it is their fault'....