Monday, September 26, 2011

The Dismal (Social) Scientist

I think Krugman is getting a bit frustrated.  Well, more frustrated.  So frustrated, in fact, he Godwined-in-all-but-name his own column.  Today he also comes about as close to calling the Eurozone elites idiots as is possible within the NYT's civility rules.  He's done so more-or-less explicitly on his blog, but that probably has a readership that is smaller by a factor of 10 or 20.  Maybe a more prominently-place tongue-lashing will have an effect, though I wouldn't count on it.

One reason for Krugman to lash out is that The Big, Fat Greek Depression continues.  The NYT has a good color article today on what the austerity is doing to the typical Greek family.  Real household income for the Firigou family has fallen about 40% between pension cuts, salary cuts, and increased taxes.  But at least they still have income.  Lots of families are undoubtedly doing much worse.

I still haven't found a good explanation for why the Greek government, which is currently controlled by the nominally left-wing Panhellenic Socialist Movement, refuses to default.  Is it national pride, or are they genuinely worried about private external debt problems?  Those would remain, and get much worse, if Greece defaulted and switched to a new currency.  I suspect most wealthy Greeks have transferred most of their liquid wealth to some other location, so that reason should not be holding the politicians up.  It's a puzzle I can't crack from afar.

ETA: Some schnitzel from Germany expects Greece to suffer for a whole decade?  That will certainly happen if it doesn't default.  On the up side, the Italian Economy Minister Giulio Tremonti is pushing back on Germany's approach pretty hard, at least in that article.

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