I now think it’s much more likely than not that Greece will ultimately leave the euro–if not this year, then soon. Best case scenario is that they get a big IMF\/euroland bailout, default on their debt and secure a reasonable restructuring from creditors–at which point they’re still stuck with an excessively tight monetary policy and an economy that isn’t all that productive, except they also can’t borrow money at attractive euro-style rates. <\/p>\n
Don’t get me wrong. I think it’s clear that on or off the euro, Greece is going to have to get its fiscal house in order and make substantial cuts to government spending. But it will be a lot easier with a looser monetary policy and a cheaper currency that makes tourism and agricultural exports more competitive. Going off the euro has huge, dramatic costs. But they probably involve fewer rioting civil servants.<\/p>\n
(Nav Image Credit: U-g-g-B-o-y-(-Photograp h-World-Sense-)\/flickr)<\/p>\n
Like Paul Krugman, I was swayed–if not convinced–by Barry Eichengreen’s argument that leaving the euro would trigger catastrophic bank runs in any country that did so, and was therefore unlikely. Perhaps, I thought, my earlier euroskepticism had been overdone. But today Krugman makes a very good point: the countries now at risk of leaving the […]<\/p>\n","protected":false},"author":80,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-547339","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/547339","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/80"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=547339"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/547339\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=547339"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=547339"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=547339"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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