Working draft for limited distribution and comment : today 4 July
Seven reasons why Northern and Eastern Europe are not supporting the Greek cause.
Forgetting the Germans (not that this is ever possible of course) and the more prissy lipped representatives of European institutions, why might we reasonably ask ourselves are there so many angry accusations coming in from Eastern and Northern Europe? It’s a bit complicated, so let us consider this in several stages.
First and most reassuring to those of us who care about the economy and democracy, these are not universally shared positions in those countries. And this is what you are not hearing from the media, as much as anything else because the real message is so complicated: namely that there are substantial portions of the populations and political alliances in each of these countries who are in fact NOT AT ALL IN AGREEMENT with the orchestrated media pronouncements of certain government representatives, including national delegations to the various European institutions. For those of us who are concerned not only with matters of the well working of the economy but also that of democracy, this multiplicity of views is reassuring news.
– Extract from article by Paul Krugman, NYT, 3 July 2015
It’s depressing thinking about Greece these days, so let’s talk about something else, O.K.? Let’s talk, for starters, about Finland, which couldn’t be more different from that corrupt, irresponsible country to the south. Finland is a model European citizen; it has honest government, sound finances and a solid credit rating, which lets it borrow money at incredibly low interest rates.
It’s also in the eighth year of a slump that has cut real gross domestic product per capita by 10 percent and shows no sign of ending. In fact, if it weren’t for the nightmare in southern Europe, the troubles facing the Finnish economy might well be seen as an epic disaster.
And Finland isn’t alone.
Signing of Versailles Treaty imposing ruinous economic sanctions on the defeated Germany
Last night I dreamt I was wandering the stacks of the great Butler Library at Columbia, in a search to see if I could identify a certain number of what I would like to call “leading political economists” who have through their work and contributions over the last several centuries helped to shape our understanding of the relationship between economy, efficiency, democracy and governance. In particular I was looking for indications in their work that would allow me to make an educated guess as to what their position might have been in the case of the Sunday Referendum in Greece.
IMF says Greece needs extra €60 bn in funds and debt relief
– Source: The Guardian, 2 July 2015. Click here for full article
The IMF said that is was releasing its preliminary draft debt sustainability analysis as a result of the leaks of documents reported in the Guardian earlier this week.
The International Monetary Fund has electrified the referendum debate in Greece after it conceded that the crisis-ridden country needs up to €60bn (£42bn) of extra funds over the next three years and large-scale debt relief to create “a breathing space” and stabilise the economy.
The complete history of the Greek debt drama in charts
* By Matt Philips, Quartz, 30 June 2015. Full article and all charts available from Quartz here
The value of any analysis depends, to a large extent, on the beginning and ending you choose.
So it is with Greece, which is seeing its simmering, half-decade-long debt crisis come to one of its periodic boils—and perhaps a final explosion.
Where to start? Records of Greek public debts stretch back at least as far as the Peloponnesian war—around 400 BCE. Should that be included? Or how about the fact that the modern nationstate of Greece has been in default for roughly half of the years since it gained independence from the Ottoman Empire in the 1830s? (After all, some trace Greek resistance to taxation to the historical taxes levied by the conquering Turks.)
For simplicity’s sake, let’s just start in the years before Greece joined the euro. In the 1980s, and early 1990s, the Greek economy was a bit of a mess.
The following declaration is signed by 246 professors at Economics Schools and Universities in Greece. By this declaration, we want to express our great distress about the latest developments in our country. We strongly believe that, at this crucial point, it is of paramount importance to avoid excesses, to show national cohesion, to preserve our position in the Eurozone and the EU, and to regain our credibility in the international community. Further, the fiscal consolidation program, drawn jointly with our EU partners and other creditors like the IMF, should be characterized by the lowest possible recessionary consequences and the highest possible level of social protection, aiming at growth and job creation in the private sector as soon as possible. The prolonged political uncertainty has led the economy to a renewed recession, has reversed the decline in unemployment, has lowered tax revenue and has widened the fiscal gap.
Europe 1 interview with Thomas Piketty on Greek crisis
– – – > 30 June Europe 1 article and video interview available here
“Expelling Greece would open up Pandora’s Box”
“The sorcerer’s apprentices who imagine that we will bring stability to the euro area by expelling a member to discipline others are extremely dangerous,” said the economist Thomas Piketty.
The analogy of Pandora’s Box may be even more applicable than one might think. If we recall the one word that appeared on the bottom of the box once all of the spirits had floated out. The word was HOPE.