– By Paul Krugman, NYT JULY 5, 2015. Full text here.
Europe dodged a bullet on Sunday. Confounding many predictions, Greek voters strongly supported their government’s rejection of creditor demands. And even the most ardent supporters of European union should be breathing a sigh of relief.
Of course, that’s not the way the creditors would have you see it. Their story, echoed by many in the business press, is that the failure of their attempt to bully Greece into acquiescence was a triumph of irrationality and irresponsibility over sound technocratic advice.
18:00, Sunday 5 July 2015 in Greece and the polls have just closed on this momentous day for democracy. The outcome of the unexpected but oh so important referendum will not be known for several hours yet. So what better time to pour a glass of cool retsina white, sit down with some friends, and sort through the accumulated evidence of these last ten days in which the eyes of the world have turned to Greece.
Here are a few observations and thoughts about the future which come most immediately to mind to this ever-curious observer:
It has been hard slogging over the last two weeks of what we hope has been balanced discussions about the economic and political crisis that is currently racking Greece, Europe and in fact the world, so before we move into our final stage of closing comment with the urns now open but before the votes are counted in Greece, what about taking a step back and seeing what would happen if we take this conflict to another, higher level? Check it out here:
Seven reasons why Northern and Eastern Europe are not supporting the Greek cause.
Forgetting the Germans (not that this is ever possible of course) and the more prissy lipped representatives of European institutions, why might we reasonably ask ourselves are there so many angry accusations coming in from Eastern and Northern Europe? It’s a bit complicated, so let us consider this in several stages.
First and most reassuring to those of us who care about the economy and democracy, these are not universally shared positions in those countries. And this is what you are not hearing from the media, as much as anything else because the real message is so complicated: namely that there are substantial portions of the populations and political alliances in each of these countries who are in fact NOT AT ALL IN AGREEMENT with the orchestrated media pronouncements of certain government representatives, including national delegations to the various European institutions. For those of us who are concerned not only with matters of the well working of the economy but also that of democracy, this multiplicity of views is reassuring news.
The roots of Greece’s crisis are simple. Before Greece joined the Eurozone, investors treated it as a middle-income country with poor governance — which is to say, a credit risk. After Greece joined the Eurozone, investors thought that Greece was no longer a credit risk — they figured, if push came to shove, other Eurozone members like Germany would bail Greece out. They were wrong.
If you had to pick one chart that encapsulates Greece’s crisis, it would be this one: