Thursday, March 8, 2012

More Nonsense from the NY Times

Nicholas Kristof has a piece in today's NY Times depicting the plight of present day Athens. He concludes that the economic collapse of Athens is the result of "Republican-like" policies enacted by the Greek government. Really?

According to Kristof, the problem in Greece is the result of "austerity" imposed by Germany and France. I'll buy that. But, the question is why is the austerity being imposed. The answer, which Kristof seems blissfully unaware of, is that Greece is broke and cannot borrow any more money from anywhere. Thus, on their knees, they have gone to the ECB for funding. Should the ECB simply write them a blank check. That seems to be the view of Kristof.

Kristof joins a long list of commentators that cannot seems to add and subtract. Where is the money to come from to continue to support Greek profligacy? Kristof, like most far left commentators, seems unconcerned about who pays for all of this. But, at some point, someone must pay for all of this. Who is that to be?

Greece is suffering from living way beyond it's means. Nothing more, nothing less. They should default on their indebtedness and start anew. That way, Greece could avoid most of the most pernicious effects of austerity. But, no. We are still in the "pretend and extend" mode. So that, for now (but not for long), we think we have forged together a "Greek solution." But, we haven't really.

As Kristof notes, austerity is disastrous. But, the right answer is not to blame some outside party for removing the punch bowl. The right answer is honesty. Admit that Greece cannot pay its debts and start anew. Just doing debt swaps with private creditors is not enough . Greece needs a total debt workout with all of its creditors, not just with the private ones.

Meanwhile, Kristof needs a lesson in arithmetic. No one can afford what goes on in Europe or the US. Eventually, those funding this kind of nonsense will quite funding it. That's where we are with Greece.

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