Don’t be taken in by claims that troika officials are just technocrats explaining to the ignorant Greeks what must be done. These supposed technocrats are in fact fantasists who have disregarded everything we know about macroeconomics, and have been wrong every step of the way. This isn’t about analysis, it’s about power — the power of the creditors to pull the plug on the Greek economy, which persists as long as euro exit is considered unthinkable.—NYT link, paywalled, Economists View link, open w. discussion.Greek PM Alexis Tsipras interview at 10pm EEST (noon PDT)
EU has issued an ultimatum: accept our terms or you’re out of the Euro (The Guardian.)Today at 10pm, I will be interviewed live on #ert by journalists P. Haritos and A. Alafogiorgos. #Greece— Alexis Tsipras (@tsipras_eu) June 29, 2015
The terms are very bad. Joseph Stiglitz:
We should be clear: almost none of the huge amount of money loaned to Greece has actually gone there. It has gone to pay out private-sector creditors – including German and French banks. Greece has gotten but a pittance, but it has paid a high price to preserve these countries’ banking systems. The IMF and the other “official” creditors do not need the money that is being demanded. Under a business-as-usual scenario, the money received would most likely just be lent out again to Greece. Guardian link.In the old days, following Stiglitz and Krugman’s advice would lead to an invasion of Greece. Now, who knows?