Must-Read: There is an astonishing antinomy in this column by the Peterson Institute’s Angel Ubide. (A) On the one hand, he says Greek nationalists and Keynesians are cynically and reprehensibly sacrificing the people of Greece in a proxy war to try to advance their anti-EU and anti-austerity views.
(B) On the other hand, he says that the nationalists — who complain that the EU is being run for the benefit of German bankers, German bank depositors, and German exporters rather than for the continent as a whole — and the Keynesians — who complain that the austerity and the lack of debt reorganization imposed on Greece is simply insane — are right.
I think Ubide should pull this back, think hard, rewrite it, and try again when he has decided whether he thinks Greece should (A) accept the Troika offer or (B) hold out for, in his words, what it deserves: “massive external assistance… the resources needed — including conditional debt relief… whatever it takes to help the Greek people recover from this tragedy…”
Angel Ubide: A Political and Intellectual Proxy War over Greece: “The conflict is a proxy for two wars — one intellectual and one political…
…in which the Greek people, especially the poor, have been taken hostage. The intellectual war is over the sustainability of the euro project and the economic effects of austerity policies. The political war is over populist and nationalistic policies…. Propaganda has taken over…. The Greek government has taken the country to the brink by calling a referendum on the program at a time when it knew such a step would lead to capital controls and bank closures. Neither the form nor the content of Tsipras’ request was conducive to an extension of the program. The rules were clear to everybody, including the Greek government. Capital controls and bank closures hurt growth….
This proxy war supporting Grexit is being fought to support the cause of Keynesian fiscal policies in the United States and the United Kingdom, of economists and others who want to say ‘I told you so’ about the unfeasibility of the euro, and of activists who want to promote populist policies elsewhere…. American pundits won’t have to live with the consequences of their advice. This proxy war must end. What Greece needs is a government that can provide lasting and credible political stability, liberalize the economy, break down oligopolies, reduce clientelism, and unlock growth…
There have certainly been mistakes made in the operation of the euro institutions…. Greece has sharply reduced its fiscal deficit — in fact, probably too much…. All parties involved have made mistakes, and Greece has suffered enormously. Regardless of the referendum outcome, the Greek economy is going to need massive external assistance…. After the referendum, Europe must re-engage with Greece, devote all the resources needed — including conditional debt relief — and, paraphrasing Mario Draghi, do whatever it takes to help the Greek people recover from this tragedy.
Originally published at www.bradford-delong.com.