Tuesday 17 Jul 2018 | 04:43 | SYDNEY
Tuesday 17 Jul 2018 | 04:43 | SYDNEY

The euro crisis explained


Sam Roggeveen


3 November 2011 15:19

Two useful primers on the Europe's currency crisis, the first via James Fallows, who says this video from NMA Taiwan 'does more to clarify the Greek debt situation than a lot of "real" news I have seen, with liberal doses of ethnic stereotyping all around.'

Second, this piece from American blogger Kevin Drum, recounting a conversation he had about the euro. Here's a taste:

Are the Greeks crazy?

No, they're just at the end of their tether. Europe is asking them to adopt more austerity than they're willing to bear.

Okay, but they're spending too much money. Surely they know they have to cut back?

Sure, but the deals on offer are pretty unattractive. Europe wants to forgive half of Greece's debt and put them on a brutal austerity plan. The problem is that this is unrealistic. Greece would be broke even if all its debt were forgiven, and if their economy tanks they'll be even broker.

But that's the prospect they're being offered: a little bit of debt forgiveness and a lot of austerity.

Well, them's the breaks.

But it puts Greece into a death spiral. They can't pay their debts, so they cut back, which hurts their economy, which makes them even broker, so they cut back some more, rinse and repeat. There's virtually no hope that they'll recover anytime in the near future. It's just endless pain. What they need is total debt forgiveness and lots of aid going forward.

Read the rest here.