So, what is to be done? First, let us be clear: Greece could be blamed for its troubles if it were the only country where the troika’s medicine failed miserably. But Spain had a surplus and a low debt ratio before the crisis, and it, too, is in depression. What is needed is not structural reform within Greece and Spain so much as structural reform of the eurozone’s design and a fundamental rethinking of the policy frameworks that have resulted in the monetary union’s spectacularly bad performance.…AlterNet
How Europe Failed Greece Over Austerity Plight
Joseph Stiglitz | University Professor at Columbia University, recipient of the 2001 Nobel Memorial Prize in economics
"There is a fear that if Greece is allowed to restructure its debt, it will simply get itself into trouble again, as will others."
ReplyDeleteStiglitz is wrong here. They will. Bill Mitchell makes this larger point in his blog today...
And then this nonsense:
"monetary union implies that member states cannot devalue their way out of trouble"
is BS also because that is not what happens either... show me a "state" that has as overt policy "devalued" at these points by having their CB permanently raise the bid for a foreign currency to the point where they "peg" their own currency to the foreign currency at a new higher rate.... doesnt exist...
A "devaluation" like this is just another temporary step in the race to the bottom.... the foreign claims build up again to the point where the regulators think they are "too high"
.... and then the external sector will eventually adjust their prices in response to the alleged "devaluation" and then the real terms of trade reach the same previous point where the nation that allegedly "devalued" is again no longer "competitive" ... rinse and repeat...
"debt restructuring" is at best a temporary reprieve to a situation like this... you cant allow the foreign claims to exist in the first place or this chaos becomes inevitable....
Stiglitz is shilling for the IMF/Lazard just like the last time. ... Varoufakis is with him you could see this as soon as Varoufakis started talking....
they are both morons...