Tim Duy has some some harsh words for the European Central Bank among others, with which I agree completely. What strikes me is that even now there seems to be no willingness to accept the fact that this isn’t a Greek problem, or even a Spain/Italy problem; it’s a European problem.
The morality play the Germans like to tell about how the crisis countries got into trouble isn’t true, but even aside from that, the question is what you do NOW. And the key point is that there is no way out for the troubled countries if Europe as a whole is marked by low growth and low inflation.
Given that reality, lecturing Greek voters on responsibility, while hinting that maybe we’ll ease the terms a bit — oh, and it’s almost time for summer vacation! — just won’t cut it.
We need a conversion experience here, not in Athens, but in Berlin and Frankfurt. Otherwise, the game is almost over.
Source: Krugman, New York Times, May 17, 2012, 7:36 am