Paul Krugman Urges Greeks To Vote 'No' On Bailout Referendum

[TheDemSocialist]

Paul Krugman is urging Greeks to vote “no” in a referendum that could determine their country’s future in the European Union.In a New York Times blog post published Sunday evening, the Nobel Prize-winning economist argued that the July 5 referendum would simply preserve the same dysfunctional austerity regime that has left Greece languishing for five years.
In that case, Krugman said, it would perhaps be better for Greece to leave the euro, reissue the drachma as a currency and simply try to weather the economic tumult that would result.
“Maybe, just maybe, the willingness to leave will inspire a rethink, although probably not,” Krugman wrote. “But even so, devaluation couldn’t create that much more chaos than already exists, and would pave the way for eventual recovery, just as it has in many other times and places.”
Moreover, Krugman pointed out, voting “yes” on such a ballot would have the effect of undermining Greece’s popularly elected government. When the leftist Syriza party was elected in January, it was seen as a strong rejection of the past five years of austerity policies imposed by Greece’s creditors. Now, if Greek voters approve the cost-cutting measures that Syriza negotiators failed to nix from the new bailout plan, it would usurp the mandate on which the party was elected. In a speech Monday that highlighted Europe's strong-arming tactics, Jean-Claude Juncker, the president of the European Commission, tellingly said that voters should "say 'yes' regardless of what the question is," since a "no" vote would "mean that Greece is saying 'no' to Europe."
“The troika clearly did a reverse Corleone -- they made [Greek Prime Minister Alexis] Tsipras an offer he can’t accept, and presumably did this knowingly,” Krugman wrote. “So the ultimatum was, in effect, a move to replace the Greek government. And even if you don’t like Syriza, that has to be disturbing for anyone who believes in European ideals.”

Read more @: Paul Krugman Urges Greeks To Vote 'No' On Bailout Referendum

:applaud:applaudIm with him. Vote no! Debt forgiveness is the only way Greece will grow out of this massive quagmire. Its either that or Greece leaves and tries to adjust their economy outside the Eurozone.

 

[joG]

Read more @: Paul Krugman Urges Greeks To Vote 'No' On Bailout Referendum

:applaud:applaudIm with him. Vote no! Debt forgiveness is the only way Greece will grow out of this massive quagmire. Its either that or Greece leaves and tries to adjust their economy outside the Eurozone.


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That is, what they should have done years ago. Unless they decide to do the currency right and stand the EU, Schengenland, Lisbonland and Euroland on a legal and economically viable footing and then get the populations to legitimize it, the other members should get out too.

 

[OrphanSlug]

Total Debt forgiveness is unlikely with a "no" vote. More likely is an eventual exit from the EU/Euro once payments are not made.

And I disagree with Paul Krugman, Greece is in this position due to long term fiscal mismanagement. It is impressively naive, or politically motivated one, for Krugman to suggest Greece's complications are due to deals in exchange for Debt restructuring (or forgiveness.) Also, his calls for "devaluation" (from his actual blog, included below) would impact more players than just Greece. The EU is already buying bonds, already engaged in QE to some extend. Engaging in more of, or some acceleration of the existing plan, does nothing for Greece if they have underline aggregate demand issues. The usual indicators are there. High unemployment, they already run high taxes, they already have spending so beyond revenues that there is no presentable plan to get to a stable fiscal position, and the EU itself is already speculating on Greece GDP growth without being able to speculate on why.

Krugman is off the mark on this one, or clearly is looking to *not* undermine a socialist party in power. Which should tell you something.

http://krugman.blogs.nytimes.com/2015/06/28/grisis/

 

[logansrun]

They should go further than what Krugman suggested. They should only give people a pro-rated conversion rate on cash above a certain level to recapture some of the taxes the billionaires have not been paying and also to bolster the value of the new currency by limiting supply.

 

[PerfectStorm]

Looks like the Greek socialists ran out of other people's money.

 

[OrphanSlug]

They should go further than what Krugman suggested. They should only give people a pro-rated conversion rate on cash above a certain level to recapture some of the taxes the billionaires have not been paying and also to bolster the value of the new currency by limiting supply.

You are literally saying issue less currency to increase valuation, which harms the income quintiles in a disproportionate way. Your plan would punish the Greek middle and lower classes, just to get more from billionaires to supplement Greece's outrageous pension plans.

 

[logansrun]

You are literally saying issue less currency to increase valuation, which harms the income quintiles in a disproportionate way. Your plan would punish the Greek middle and lower classes, just to get more from billionaires to supplement Greece's outrageous pension plans.

It will only benefit the lower classes as the billionaires will have already made their run on the banks. Shorting the money supply increases velocity. Increasing velocity benefits the lower quintiles. The United States Great Stagnation is an example of what happens when velocity falls.

 

[DarkWizard12]

Read more @: Paul Krugman Urges Greeks To Vote 'No' On Bailout Referendum :applaud:applaudIm with him. Vote no! Debt forgiveness is the only way Greece will grow out of this massive quagmire. Its either that or Greece leaves and tries to adjust their economy outside the Eurozone. [/FONT][/COLOR]

Interesting how a socialist like you, and an evil conservative like myself comes to the same conclusions.....I hope to GOD the greeks vote no, show the world your true colors, make the socialist bastards suffer.

 

[TheDemSocialist]

Looks like the Greek socialists ran out of other people's money.

Do you even know what you're talking about?

 

[TheDemSocialist]

Interesting how a socialist like you, and an evil conservative like myself comes to the same conclusions.....I hope to GOD the greeks vote no, show the world your true colors, make the socialist bastards suffer.

But the possibility of leaving the Euro was part of SYRIZAs (a coalition of socialists and communists) platform.....

 

[DarkWizard12]

But the possibility of leaving the Euro was part of SYRIZAs (a coalition of socialists and communists) platform.....

Then I wish them good luck with that. Don't expect the EU not to bitch and moan about it though.

 

[TheDemSocialist]

Then I wish them good luck with that. Don't expect the EU not to bitch and moan about it though.

They can bitch and moan all they want.

 

[PoS]

Unless the Greeks can somehow make systemic reforms of their economy (improving tax collections, privatization, pension reforms, etc.) all this will amount to nothing. If Greece leaves the Eurozone its banks will be screwed and they will become financial pariahs like Argentina and the EU will still require them to pay their debts, the Drachma will probably be worthless and they may end up pegging it to the Dollar and the Greek people will still be screwed. Krugman is a fraud.

 

[RGacky3]

Unless the Greeks can somehow make systemic reforms of their economy (improving tax collections, privatization, pension reforms, etc.) all this will amount to nothing. If Greece leaves the Eurozone its banks will be screwed and they will become financial pariahs like Argentina and the EU will still require them to pay their debts, the Drachma will probably be worthless and they may end up pegging it to the Dollar and the Greek people will still be screwed. Krugman is a fraud.

The Greeks HAVE been privitizing, and cutting benefits, and raising taxes on the poor ... it hasn't worked, and they cna't improve tax Collections when the measures bieng pushed on them are destroying the tax base, destroying the economy. You don't fix an economy by destroying and shrinking it through austerity.

Argentina is doing quite well.

 

[gunner]

Looks like the Greek socialists ran out of other people's money.

When you're locked into a system that simply thrust money onto you, it's hard to envisage a different path.

 

[PoS]

The Greeks HAVE been privitizing, and cutting benefits, and raising taxes on the poor ... it hasn't worked, and they cna't improve tax Collections when the measures bieng pushed on them are destroying the tax base, destroying the economy. You don't fix an economy by destroying and shrinking it through austerity.

Nope, the Greeks have not done enough to address those systemic problems.

Take tax collections for example:

Greece Struggles to Get Citizens to Pay Their Taxes - WSJ

At the end of 2014, Greeks owed their government about €76 billion ($86 billion) in unpaid taxes accrued over decades, though mostly since 2009. The government says most of that has been lost to insolvency and only €9 billion can be recovered.

Billions more in taxes are owed on never-reported revenue from Greece’s vast underground economy, which was estimated before the crisis to equal more than a quarter of the country’s gross domestic product.

The International Monetary Fund and Greece’s other creditors have argued for years that the country’s debt crisis could be largely resolved if the government just cracked down on tax evasion. Tax debts in Greece equal about 90% of annual tax revenue, the highest shortfall among industrialized nations, according to the Organization for Economic Cooperation and Development.

Its clear that even this new government is unable to make any headway in regards to their tax collection problems, all they can do is make promises of reform and do nothing, just like previous governments have done. So in the end there has been no reform to speak of. There is also massive corruption on all levels of government, there was even a non-existent health authority that was created from scratch by government workers just to funnel money to themselves. Contracts are unenforceable and many sectors of industry are controlled by prominent oligarchs- the underground economy is almost as big as the main economy of the country.

Argentina is doing quite well.

lolwhut? A country that has 40% inflation is doing well? :lol:

 

[Anglo-scot]

Total Debt forgiveness is unlikely with a "no" vote. More likely is an eventual exit from the EU/Euro once payments are not made.

And I disagree with Paul Krugman, Greece is in this position due to long term fiscal mismanagement. It is impressively naive, or politically motivated one, for Krugman to suggest Greece's complications are due to deals in exchange for Debt restructuring (or forgiveness.) Also, his calls for "devaluation" (from his actual blog, included below) would impact more players than just Greece. The EU is already buying bonds, already engaged in QE to some extend. Engaging in more of, or some acceleration of the existing plan, does nothing for Greece if they have underline aggregate demand issues. The usual indicators are there. High unemployment, they already run high taxes, they already have spending so beyond revenues that there is no presentable plan to get to a stable fiscal position, and the EU itself is already speculating on Greece GDP growth without being able to speculate on why.

Krugman is off the mark on this one, or clearly is looking to *not* undermine a socialist party in power. Which should tell you something.

http://krugman.blogs.nytimes.com/2015/06/28/grisis/

From your post, you obviously have a greater command of economics than I will ever have. But what do you propose should happen? Can Greece go on in semi-defaulting limbo forever, with 60% youth unemployment, and a GDP which has shrunk 25% in 5 years? To me, the fundamentals are not there for the Greeks to recover and no amount of loans and financial shenanigans will change that. How can they grow their economy again if they are a constant financial basket case?

 

[RGacky3]

Nope, the Greeks have not done enough to address those systemic problems.

Take tax collections for example:

Greece Struggles to Get Citizens to Pay Their Taxes - WSJ

Ok, so what should they do? What CAN they do? as of now they can't do anything without the permission of the Troika, they want to fix their tax problem, but they are not being allowed to.

Its clear that even this new government is unable to make any headway in regards to their tax collection problems, all they can do is make promises of reform and do nothing, just like previous governments have done. So in the end there has been no reform to speak of. There is also massive corruption on all levels of government, there was even a non-existent health authority that was created from scratch by government workers just to funnel money to themselves. Contracts are unenforceable and many sectors of industry are controlled by prominent oligarchs- the underground economy is almost as big as the main economy of the country.

What they promised was that they were not going to Accept the bailout terms of constant and indescriminate austerity and rather negotiate for a better deal. That's what they are doing.

They can't make any headway in regards to tax Collection because they can't actually do ANY reforms ouside the troika austerity without the troikas permission.

No **** there's corruption and Syriza talks about that and is trying to fix it.

Yes, yes and yes, the Greece economy is in the ****ter ... and yet you're solution, is what? More Austerity? Should Syriza just do what the past governments did and hand the keys to the Troika?

lolwhut? A country that has 40% inflation is doing well? :lol:

It's not 40%, more around 15%, quite a lot.

But inflation is not the measure of a good economy. Poverty is low and falling, inequality is falling, standards of living are higher than many other countries in the area, and rising.

 

[Peter Grimm]

Total Debt forgiveness is unlikely with a "no" vote. More likely is an eventual exit from the EU/Euro once payments are not made.

And I disagree with Paul Krugman, Greece is in this position due to long term fiscal mismanagement. It is impressively naive, or politically motivated one, for Krugman to suggest Greece's complications are due to deals in exchange for Debt restructuring (or forgiveness.) Also, his calls for "devaluation" (from his actual blog, included below) would impact more players than just Greece. The EU is already buying bonds, already engaged in QE to some extend. Engaging in more of, or some acceleration of the existing plan, does nothing for Greece if they have underline aggregate demand issues. The usual indicators are there. High unemployment, they already run high taxes, they already have spending so beyond revenues that there is no presentable plan to get to a stable fiscal position, and the EU itself is already speculating on Greece GDP growth without being able to speculate on why.

Krugman is off the mark on this one, or clearly is looking to *not* undermine a socialist party in power. Which should tell you something.

http://krugman.blogs.nytimes.com/2015/06/28/grisis/

I think he was talking about devaluation of the drachma after a greek exit from the euro.

Regardless, there's really only two paths the Eurozone.... and I say the eurozone because this issue is larger than just greece.... can take. Either Greece exits and other countries follow in the future, or some mechanism needs to be put in place wherein wealth can be transfered from the wealthier countries of Germany, France, and Northern Europe to the more economically disadvantaged areas of the Eurozone on a regular basis without penalty.

That would be politically unpopular, but that is what needs to happen in order to have a truly stable monetary union.

While debt forgiveness (partial or total) is one way to achieve this, it's clumsy.... and the aim would far better be served by a truly integrated fiscal policy which will likely never happen.

I just don't see a way forward for the Euro, frankly. To make it work, they would have to make commitments that I don't think the people of Europe, particularly northern Europe, would be willing to make.

 

[OrphanSlug]

It will only benefit the lower classes as the billionaires will have already made their run on the banks. Shorting the money supply increases velocity. Increasing velocity benefits the lower quintiles. The United States Great Stagnation is an example of what happens when velocity falls.

I do not buy that some degree of revaluation will benefit those already hurting in the Greek economy, staying in the EU or going with their own currency once kicked out.

 

[Ockham]

Total Debt forgiveness is unlikely with a "no" vote. More likely is an eventual exit from the EU/Euro once payments are not made.

And I disagree with Paul Krugman, Greece is in this position due to long term fiscal mismanagement. It is impressively naive, or politically motivated one, for Krugman to suggest Greece's complications are due to deals in exchange for Debt restructuring (or forgiveness.)

My guess is Krugman's view is to double and triple down that the EU zone would rather continue to support the failing Greece than possibly let Greece topple the EU Zone and have the Euro fail monetarily. What progressive morons like Krugman think is if you should and burn the country long enough, someone will provide the welfare to keep them quiet and non-violent. My view is to cut them free and let whatever happens happen. Greece got itself into this, they'll need to get themselves out. If they want to burn their own country in protest, killing their own people in the process - that's their choice.

 

[OrphanSlug]

From your post, you obviously have a greater command of economics than I will ever have. But what do you propose should happen? Can Greece go on in semi-defaulting limbo forever, with 60% youth unemployment, and a GDP which has shrunk 25% in 5 years? To me, the fundamentals are not there for the Greeks to recover and no amount of loans and financial shenanigans will change that. How can they grow their economy again if they are a constant financial basket case?

Thank you for the kind words, but I tend to think my grasp of economics is *just* enough to make it dangerous.

The only plausible path for Greece to stay in the EU/Euro (in some reasonable good term condition) would be to accept EU/ECB conditions for a continued bailout and infusion of cash. Any recovery would take longer, but there is really no other option given the fiscal mismanagement to date. If they exit, then it all comes down to how quickly they could jump start their own economy on a new currency (perhaps using Russia for debt restructure help.) With all that debt and irresponsible promises made that could be very problematic.

The reason that this has been dragged out for so long is we are in uncharted territory on what would happen with a nation exit from the EU/Euro. We simply do not know for sure what would happen if Greece gets to a point of default (IMF just claims this is skipping a payment, the rest of us call it a default) *and* Greece rejects any outside interference in their internal fiscal and economic policy.

We have to account that Greek banks are already closed, we have monetary restrictions in place, and capital controls in place. A run on the banks now would be catastrophic. Without a new deal it looks like Greece will have to exit. Going into the exit with cash in a precarious position, as well as controls in place, that directly impacts GDP.

But I think Greece is gambling, urging a "no" vote on the referendum is now about a game of chicken. If Greece defaults, it will be on the other member nations to kick them out. Meaning, we are talking about the ultimate game of political clout. Who has the most, those that would want Greece out or those that look at a Greece exit as too expensive for the EU/ECB? Either way, the markets will be rocked for days until this is sorted out. For this discussion Greece has until midnight today to decide on negotiations or play this game.

 

[PoS]

Ok, so what should they do? What CAN they do? as of now they can't do anything without the permission of the Troika, they want to fix their tax problem, but they are not being allowed to.

They can show the EU that they are serious about recovering their tax revenue, thats what. How about going after the tax evaders for one? They dont need the EU's permission for that.

It's not 40%, more around 15%, quite a lot.

But inflation is not the measure of a good economy. Poverty is low and falling, inequality is falling, standards of living are higher than many other countries in the area, and rising.

LOL, wrong, it is at 40%.

http://www.businessinsider.com/the-...hy-inflation-in-argentina-is-so-insane-2015-5

Argentina Economy Can

While consumer prices rose 24 percent in 2014, according to the government, private estimates place the figure at almost 40 percent. The official peso rate weakened 23 percent in 2014, mainly due to a 19 percent devaluation in January 2014. A black market for the currency trades at about 12.8 compared with the official rate of 8.76.

In fact the inflation rate in Argentina has averaged at over 200% since the 1940's till now, this is nothing new. The country has been mismanaged for decades, just like Greece has and is being.

 

[TheDemSocialist]

Unless the Greeks can somehow make systemic reforms of their economy (improving tax collections, privatization, pension reforms, etc.) all this will amount to nothing. If Greece leaves the Eurozone its banks will be screwed and they will become financial pariahs like Argentina and the EU will still require them to pay their debts, the Drachma will probably be worthless and they may end up pegging it to the Dollar and the Greek people will still be screwed.

How is the EU going to make them pay their debts if they leave the Euro?

Krugman is a fraud.

You kinda agreed with a lot Krugman had to say in your post....

 

[PoS]

How is the EU going to make them pay their debts if they leave the Euro?


You kinda agreed with a lot Krugman had to say in your post....

Wrong, read what I wrote again. Krugman blames all the problems on austerity and he is essentially saying all the Greeks have to do is leave the Euro as a currency and they will be fine- I do not agree with that at all. And Ive said as much.