My first petulant post-Greek-election comment: this is a
triumph of wishful thinking. Actually, there was no good option in this
election. At the moment Greece is out of good options. This
declaration of faith in European unity and the power of austerity does nothing
but prolong and deepen the anguish, and in the end Greece may still default and
exit the Euro. The terms of trade between the GIPSIs and the rest of
Europe, but primarily with Germany, must change, and within the Euro that can
happen only by inflation in Germany or deflation in the GIPSIs. Of these
two, inflation is the best choice; it's easy and and the discomfort is fairly
mild. Deflation takes a very long time, and creates tangle of
bankruptcies and broken contracts, a generation---or more---of lost potential,
and masses of human pain.
Still, no one knows the future for certain. I hope
this works for them.
PS: I just read Krugman's response, which contained this
line:
"So they will now have the ability to continue pursuing an
unworkable
policy. Yay!"
It's good to have my petulance seconded at the higher and more dignified levels of economic debate.
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