We get lots of pundits declaring that it's Greece's loss if they leave the euro but that the euro will be fine. No doubt in a monetary sense this is true-a Grexit probably leads the euro to rise precipitously,
The point is well taken that Greece is a small country with a small economy that contributes very slightly to EZ GDP.
Of, course this goes the other way as well. It's debts while a large amount for the Greek economy to weather would be a drop in the bucket to forgive or at least cut significantly. Yet the EU simply won't hear of this. Why?
They claim this will lead to a precedent in other similarly stressed euro countries like Spain and Portugal. So the concern is the political impact. But the political impact is why despite the truth that Greece is a tiny economy whose leaving on a simply economic basis shouldn't be expected to do too much harm is actually something that the EU no matter its brave comments to the contrary and no matter even the fact that the ECB is said to have 'walled off' any negative effects is worried about Greece leaving.
The case could be made that if Greece leaves everything changes-not for economic and monetary reasons but political reasons:
"Populist parties in Spain, Ireland and other austerity-stricken European countries are flocking to support the Greek government’s defiance of its creditors, and to encourage Greek citizens to vote against the creditors’ bailout proposal in a July 5 referendum."
The point is well taken that Greece is a small country with a small economy that contributes very slightly to EZ GDP.
Of, course this goes the other way as well. It's debts while a large amount for the Greek economy to weather would be a drop in the bucket to forgive or at least cut significantly. Yet the EU simply won't hear of this. Why?
They claim this will lead to a precedent in other similarly stressed euro countries like Spain and Portugal. So the concern is the political impact. But the political impact is why despite the truth that Greece is a tiny economy whose leaving on a simply economic basis shouldn't be expected to do too much harm is actually something that the EU no matter its brave comments to the contrary and no matter even the fact that the ECB is said to have 'walled off' any negative effects is worried about Greece leaving.
The case could be made that if Greece leaves everything changes-not for economic and monetary reasons but political reasons:
"Populist parties in Spain, Ireland and other austerity-stricken European countries are flocking to support the Greek government’s defiance of its creditors, and to encourage Greek citizens to vote against the creditors’ bailout proposal in a July 5 referendum."
"Spain’s ascendant left-populist party Podemos called for a solidarity rally with Greece’s Syriza-led government, drawing hundreds of attendees in Madrid on Saturday, the Wall Street Journal reported."
"Francisco Ramon, an unemployed technology worker, told the Wall Street Journal the outcome of Greece’s struggle with its creditors could affect Spain’s ability to advance its own economic prospects."
"What’s happening in Athens now is decisive not only for Greece, but also for Spain and for all of Europe,”Ramon said.
"Syriza’s decision to call a referendum vote on the creditors’ proposal alsoelicited the endorsements of Gerry Adams, the leader of Ireland’s left-wing opposition party Sinn Fein; Italy’s contrarian comedian-turned-politician Beppe Grillo; and other critics of eurozone austerity policies."
http://www.huffingtonpost.com/2015/06/29/europe-populism-greece-solidarity_n_7692256.html
This is the classic case of a 'bad example.' We have the prospects of a country doing the unthinkable and defying the Troika-today it's already defaulted on an IMF payment.
If Greece lives to tell about defying austerity and maybe even leaving the euro then other countries like Spain, Portugal-or even a good austerity foot soldier like Ireland-begins to think maybe there's hope after all.
Syrzia was not wrong: what the EU is trying to do is not kick out Greece but destroy his government. This whole thing is not about economics but politics.
http://diaryofarepublicanhater.blogspot.com/2015/06/joseph-stiglitz-shows-that-eu-is.html
No comments:
Post a Comment