Sunday, July 12, 2015

Krugman on Angie's disaster

Even Krugman seems to feel the next to throw in a routine dig at the Greek government in his discussions of the Greek crisis. But he's been consistently right about the disastrous macroeconomics of the Troika's program for Greece.

In, Krugman writes in Disaster In Europe 07/12/2015:

The thing is, all the wise heads saying that Grexit is impossible, that it would lead to a complete implosion, don’t know what they are talking about. When I say that, I don’t mean that they’re necessarily wrong — I believe they are, but anyone who is confident about anything here is deluding himself. What I mean instead is that nobody has any experience with what we’re looking at. It’s striking that the conventional wisdom here completely misreads the closest parallel, Argentina 2002. The usual narrative is completely wrong: de-dollarization did *not* cause economic collapse, but rather followed it, and recovery began quite soon.

There are only terrible alternatives at this point, thanks to the fecklessness of the Greek government and, far more important, the utterly irresponsible campaign of financial intimidation waged by Germany and its allies. And I guess I have to say it: unless Merkel miraculously finds a way to offer a much less destructive plan than anything we’re hearing, Grexit, terrifying as it is, would be better. [my emphasis]

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