By Petar Pismestrovic. Image source: The Greek Crisis
Readers of my blog know the following things concerning my view on Greece and the eurocrisis:
The crisis in Greece is not cyclical.It is not about relative prices but about absolute productive capacities.
Focusing only on Greece is false, since the crisis is deeply rooted in the ill design of the eurozone. The eurocrisis has local particularities, which however need to be seen as facets of the same systemic crisis, not as isolated, perfectly separable national crises.
The Greek state needs to run primary surpluses otherwise even the idea of exiting the euro is pernicious, since all funding for essential state expenses will be cut and the banking system will be excluded from crucially important ECB-Eurosystem liquidity (through the TARGET2 payment system)
Inflationary policies are disastrous.The arguments which effectively support inflationary policies, i.e. currency depreciation, fail to grasp the redistributive effect of inflation from the lower parts of the income […]