Sunday, November 06, 2011

Greek crisis rolls on

Greece's PASOK (Socialist) Party Prime Minister Georgios Papandreou is leaving office, stepping down when a new coalition government of PASOK and the conservative New Democratic Party takes office: Lefteris Papadimas and Harry Papachristou, Greece seals sketchy coalition deal Reuters 11/06/2011. Presumably the vote in Parliament to establish the new government will take place in the next few days.

The two new coalition parties have agreed on new elections of February 18. Papandreou has been saying that new elections would be catastrophic, for reasons that were never entirely clear to me. Whether he still thinks that remains to be seen. As we know from last week, a categorical statement from him can be drastically revised within a few days time.

Reuters has a bio of the American-born Papandreou: Dina Kyriakidou, Greece's Papandreou, Socialist scion, felled by debt 11/06/2011.

An Athens News editorial observes, "the policies of confusion and inconsistency that have marked so much of our existence as a bailed-out nation look set to continue." (Confusion and inconsistency 11/06/2011)

Pablo Rodríguez Suanzes in El Mundo looks at Greece's situation in ¿Hay vida después de la quita? 06.11.2011. His article points out that the writedown of Greek debt in the current EU proposal will give insufficient debt relief to Greece, even if the banks agree to it. That deals offers a writedown of only about a fourth of it. They need a writedown ("haircut") of 50-60%. He quotes Nouriel Roubini of Roubini Global Economics as saying flatly that Greece should get out of the euro. And he cites Paul Krugman's use of the example of Argentina, which strongly suggests that Greece would do much better following their example in 2001 of uncoupling their peso from the US dollar - an analogous situation to Greece not controlling its own currency - and defaulting on their unpayable debt.

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