He points to that example of Argentina in the early 2000s. I've argued that I don't believe a no vote really is a vote to leave the euro. The reason-Germany and other strong economies benefit too much from having the suffering Greece in the EU.
http://diaryofarepublicanhater.blogspot.com/2015/07/germany-will-never-let-greeks-leave-euro.html
http://diaryofarepublicanhater.blogspot.com/2015/07/nick-rowe-on-greece.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+DiaryOfARepublicanHater+%28Diary+of+a+Republican+Hater%29
However, I also believe that even if Tsipras is wrong and a no vote means they're gone they should be prepared for this then. The status quo is just not working.
http://www.huffingtonpost.com/2015/07/03/deadly-austerity-greece-health_n_7718306.html
Stiglitz certainly agrees that there is an even worse fate for Greece than default.
"When, five years ago, Greece's crisis began, Europe extended a helping hand. But it was far different from the kind of help that one would have wanted, far different from what one might have expected if there was even a bit of humanity, of European solidarity."
"The initial proposals had Germany and other "rescuers" actually making a profit out of Greece's distress, charging a far, far higher interest rate than their cost of capital. Worse, they imposed conditions on Greece -- changes in its macro- and micro-policies -- that would have to be made in return for the money."
http://www.huffingtonpost.com/joseph-e-stiglitz/argentina-greece-default_b_7697838.html?utm_hp_ref=world
"Europe's helping hand has just been dreadfully paternalistic. The Germans benefit from having the Greeks on the euro as this greatly weakens the euro. So perversely they do well when Greece does poorly-as it depreciates the euro further."
Stiglitz compares Greece to Argentina 15 years ago:
"Defaults are difficult. But even more so is austerity. The good news for Greece is that, as Argentina showed, there may be life after debt and default."
"In both cases, creditor institutions pretended that sustainability could be regained through "structural adjustments." Under intense pressure, the programs that were foisted on them were accepted and implemented -- but they obviously didn't work. Exchanging "bailout" funds -- funds that were mostly used to repay the very same creditors that were providing them -- for adjustments (and promises of even bigger adjustments) spiraled into economies that got ever weaker. In the case of Argentina, after years of suffering, the people went into the streets."
The Germans and the French who worry about moral hazard forget that they were given bailouts in 2012.
"Those who get saved by the bailouts (as the German and French banks in the case of Greece) usually give moral hazard as the reason to avoid debt restructuring. They claim that it would create perverse incentives; other debtors would be more inclined to "abuse" borrowing by not repaying. But the moral hazard argument is a fairy tale. Both Argentina and Greece had already paid a very high price for their debt problems by the time of default. No country in the world would be happy to follow the same road."
To be sure, in a sense it's tougher for the Greeks than for Argentina in 2000 as they would have to introduce a whole new currency-the Drachma.
Even so, Stiglitz agrees that with choices between bad alternatives, they should at least choose the option with some hope:
"This Sunday, Greek citizens will debate two alternatives: austerity and depression without end, or the possibility of deciding their own destiny in a context of huge uncertainty. None of the options are nice. Both could lead to even worse social disruptions. But while with one of them there is some hope, with the other there is not."
Again, I'm not at all clear that there will be a Grexit with a no vote-prior to the vote the EU wants them to believe this-to get them to vote yes. Once it's over the Greeks may well be able to get a better deal.
http://diaryofarepublicanhater.blogspot.com/2015/07/germany-will-never-let-greeks-leave-euro.html
http://diaryofarepublicanhater.blogspot.com/2015/07/nick-rowe-on-greece.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+DiaryOfARepublicanHater+%28Diary+of+a+Republican+Hater%29
However, I also believe that even if Tsipras is wrong and a no vote means they're gone they should be prepared for this then. The status quo is just not working.
http://www.huffingtonpost.com/2015/07/03/deadly-austerity-greece-health_n_7718306.html
Stiglitz certainly agrees that there is an even worse fate for Greece than default.
"When, five years ago, Greece's crisis began, Europe extended a helping hand. But it was far different from the kind of help that one would have wanted, far different from what one might have expected if there was even a bit of humanity, of European solidarity."
"The initial proposals had Germany and other "rescuers" actually making a profit out of Greece's distress, charging a far, far higher interest rate than their cost of capital. Worse, they imposed conditions on Greece -- changes in its macro- and micro-policies -- that would have to be made in return for the money."
http://www.huffingtonpost.com/joseph-e-stiglitz/argentina-greece-default_b_7697838.html?utm_hp_ref=world
"Europe's helping hand has just been dreadfully paternalistic. The Germans benefit from having the Greeks on the euro as this greatly weakens the euro. So perversely they do well when Greece does poorly-as it depreciates the euro further."
Stiglitz compares Greece to Argentina 15 years ago:
"Defaults are difficult. But even more so is austerity. The good news for Greece is that, as Argentina showed, there may be life after debt and default."
"In both cases, creditor institutions pretended that sustainability could be regained through "structural adjustments." Under intense pressure, the programs that were foisted on them were accepted and implemented -- but they obviously didn't work. Exchanging "bailout" funds -- funds that were mostly used to repay the very same creditors that were providing them -- for adjustments (and promises of even bigger adjustments) spiraled into economies that got ever weaker. In the case of Argentina, after years of suffering, the people went into the streets."
The Germans and the French who worry about moral hazard forget that they were given bailouts in 2012.
"Those who get saved by the bailouts (as the German and French banks in the case of Greece) usually give moral hazard as the reason to avoid debt restructuring. They claim that it would create perverse incentives; other debtors would be more inclined to "abuse" borrowing by not repaying. But the moral hazard argument is a fairy tale. Both Argentina and Greece had already paid a very high price for their debt problems by the time of default. No country in the world would be happy to follow the same road."
To be sure, in a sense it's tougher for the Greeks than for Argentina in 2000 as they would have to introduce a whole new currency-the Drachma.
Even so, Stiglitz agrees that with choices between bad alternatives, they should at least choose the option with some hope:
"This Sunday, Greek citizens will debate two alternatives: austerity and depression without end, or the possibility of deciding their own destiny in a context of huge uncertainty. None of the options are nice. Both could lead to even worse social disruptions. But while with one of them there is some hope, with the other there is not."
Again, I'm not at all clear that there will be a Grexit with a no vote-prior to the vote the EU wants them to believe this-to get them to vote yes. Once it's over the Greeks may well be able to get a better deal.
No comments:
Post a Comment