So you can imagine my delight when The Old Grey Lady tapped the estimable Paul Krugman to tell us "What Greece Means."
Now, I know sometimes editors draft the headlines for op-eds and other times the author gets to write it. Given the evident self-worth of both parties either is possible here. Regardless of who is responsible, it no more tells the reader what the Greek bailout means in any sense than it does how to make spanakopita.
For seven paragraphs, Krugman tells tales of woe from Greece and other similarly economically situated European nations: negative economic growth, astronomical unemployment, plummeting standards of living. He throws a few valid jabs at Republicans who use Greece as a cautionary tale for the U.S. on deficit spending. I nodded. Well sure, Greece's current political and economic system is roughly as old as disco and in no way resembles the U.S. We won't likely suffer a crisis of insolvency (because the fed can print money to give to big banks who can then buy U.S. debt but that's a different story) like Greece so comparisons to them are really silly.
Surprisingly, however, he barely references the massive amount of public debt and the historic write-down of privately-held Greek bonds. Instead, Krugman's economy crushing villains are the austerity measures that were preconditions for Greece and others to receive Euro bailout funds. He gave the briefest of nods to the fact that countries required historic bailouts because they have debts they can't possibly hope to repay but he clearly sees the austerity measures as the wrong medicine for what ails Greece.
As if reading my mind, Krugman opens paragraph eight with, "You may ask what alternative countries like Greece and Ireland had." Yes, Paul, I might. "[T]he answer is that they had and have no good alternatives short of leaving the euro."
And by the way, nobody thinks leaving the euro is a good option. Just another bad one.
Not exactly the payoff I expected or, frankly, deserved for being told how wrong austerity measures were but if he could finally get to WHAT GREECE MEANS then I could, perhaps, find my time reading this column well-spent.
Unfortunately, the next two paragraphs deliver nothing more than a mishmash of Krugman beliefs on government spending during a recession with nonsensical Greek comparisons:
Germany and the European Central Bank could take action to make that extreme step less necessary, both by demanding less austerity and doing more to boost the European economy as a whole. But the main point is that America does have an alternative: we have our own currency, and we can borrow long-term at historically low interest rates, so we don’t need to enter a downward spiral of austerity and economic contraction.
So it is time to stop invoking Greece as a cautionary tale about the dangers of deficits; from an American point of view, Greece should instead be seen as a cautionary tale about the dangers of trying to reduce deficits too quickly, while the economy is still deeply depressed. (And yes, despite some better news lately, our economy is still deeply depressed.) (emphasis mine)So, according to Krugman, WHAT GREECE MEANS is that, first, the European Central Bank should do, um, stuff, to make things, you know, better. And, second, the U.S. can do stuff Greece can't because we are the world's largest economy and we didn't do something enormously stupid like give up monetary sovereignty.
Finally, because we don't face the same economic constraints as Greece, we should continue to deficit spend because we can and if we don't we might end up like Greece even though Greece's problems were the direct result of economic constraints that don't apply to the U.S.
Thanks, Paul. Any good recipes for baklava?