Monday, July 6, 2015

The Greeks Have Said No to Failed Policies, Not to Europe or the Euro

The referendum that just took place in Greece in which 61.3% of voters rejected the terms of an international ‘bailout’ package should not be read as a vote in favour of leaving the euro. The ‘No’ vote – όχι in Greek – is, as correctly pointed out by James K. Galbraith, the only hope for Europe. On the other hand, it may very well be used by the Troika – the European Union (EU), the European Central Bank (ECB), and the International Monetary Fund (IMF) – as an instrument for expelling Greece from the monetary union. If that happens, we have a Grexpulsion and not a Grexit, the more common name for the abandonment of the euro. After all, it is very clear that SYRIZA knows that the costs of leaving the euro may very well outweigh the advantages, and that Greece is not Argentina, as noted by its Finance Minister (as it turns ex) Yanis Varoufakis recently.

The relationship between West European powers and the Greek Left has been problematic for a long while. In the aftermath of World War II, the British and then the Americans, sided with collaborationists, rather than with the resistance, which had communist leanings, and was seen potentially allied to the Soviets. As Tony Judt says of Greece in Postwar: A History of Europe Since 1945, “despite a significant level of wartime collaboration among the bureaucratic and business elites, post-war purges were directed not at the Right but the Left. This was a unique case but a revealing one.” The British and Americans preferred a conservative government, even if it meant dealing with businessmen who had collaborated with Fascists, rather deal with a communist or socialist threat.

Read rest here.


  1. BTW over the 2000-2012 period the cumulative greek trade account deficit was around €230 billions. A big fat greek import party!

    Probably a portion of that was financed with greek saving, but most of it was financed with borrowing from Greece's EU "partners", some of which were complicit in the greek plan.

    1. Exactly. If you read the post you'll see I suggest exit is a problem because of the CA. And we have a paper on the euro crises with Esteban Pérez on the Real World Economic Review in which we show the CA problems of all the peripheral countries, solved with austerity btw.


Bretton Woods and corporate defaults

In the Eatwell and Taylor book, Global Finance at Risk , they had, I think, a graph with the percentage of corporate bonds in default in the...