The Nobel Prize-winning economist Paul Krugman gave an interview to CNN regarding the Greek crisis, the possibility of a ‘Grexit’ and how it would affect the European Union.
During the interview the economist notes that the Greek government though that it “could simply demand better terms without having any backup plan”, but further explained that “it’s not as if the terms that they were being offered before were feasible […] the new terms are even worse, but the terms they were being offered before were still not going to work” and conclude that he “may have overestimated the competence of the Greek government”.
Furthermore, he asserted that the Greek crisis was anything but over since “nothing has changed in the strategy, which is still cut, cut, and, you know, austerity your way to back to solvency, which wasn’t working, has never worked, actually, in this kind of situation, and will not work. So all that’s happened is that they’ve – we’ve gotten a pause for the moment, maybe. I’m not even sure of that. It’s amazing – we’re by no means out of the woods”.
When asked about the inevitability of a ‘Grexit’, Mr. Krugman highlighted the importance of the “enormous debt relief” that Greece is being denied and added that “my money, in some currency or other, is on exit one way or another”. He further explained that a Grexit would have “huge implications” on the future of Europe. Should Greece start to recover outside of Europe, this “would be encouragement for other political movements to challenge the Euro”.
