Grexit- Greece and the Argentina example of default and recovery revisited in June 2015 with an impasse in debt negotiations

06/25/2015

James Stewart in the NYT cites 2 papers, one by Prof. Arturo Porzecanski at American University and the other from Daniel Gros at the Center for European Policy Studies in Brussels, which show the serious problems of Greece following the Argentina example. Argentina defaulted on its debt in 2001 with the the ensuing years resulting in economic chaos. It recovered because of demand from Brazil and China for its exports of soyabeans, corn and soya oil. It also has large oil and shale reserves. Greece's main exports are cotton and fish, which are not in high demand, and cannot provide an economic boost. Tourism has gone up with price reductions, yet total revenues have not changed. The Greek banks are dependent on the ECB for financing, and the Greek business sector operates with borrowings in euros. Conversion to drachmas would be much more difficult than Argentina's shift to the peso and removing the peso's peg to the dollar. Stewart says he talked to Greece's finance minister Varoufakis about this, and Varoufakis is of the view that Argentina is not the right example for Greece. Greeks voted in Syriza to negotiate a better deal, and rejecting austerity- yet a majority of Greeks in 2015 favor staying in the eurozone and the European Union.

Grouped Articles

If Greece Defaults, Imagine Argentina, but Much Worse

New York Times 06/25/2015

James B. Stewart, James, B., Stewart

Greece Calls Referendum on Bailout Terms

Wall Street Journal 06/27/2015

Marcus Walker And Stelios Bouras, Marcus, Walker, And, Stelios, Bouras

Greek Debt Crisis Intensifies as Extension Request Is Denied

New York Times 06/27/2015

James Kanter, James, Kanter, Jim Yardley, Jim, Yardley

Greece Defaults on IMF Loan Despite New Push for Bailout Aid

Wall Street Journal 07/01/2015

Gabriele Steinhauser, Gabriele, Steinhauser

Greece, Missing I.M.F. Payment, Is Called Effectively in Default

New York Times 06/30/2015

Jim Yardley, Jim, Yardley, James Kanter, James, Kanter, Jack Ewing, Jack, Ewing

Suicide Isn’t Painless

Wall Street Journal 07/02/2015

Editorial

Greece's finance minister, Gikas Hardouvelis, June 2014- Jan. 2015 under the Samaras administration, on how the crisis in Greece developed in 2014-2015

07/06/2015

Hardouvelis, a professor at the University of Piraeus in Greece, and finance minister during the last 18 months of the Samaras administration to Jan. 2015, describes how the crisis developed in 2014-2015- with the IMF seeking leverage for change in Greece, the mismanagement of the economy and negotiations by Tsipras and Syriza, and Syriza's focus on debt. He says debt is not an issue as it is easily serviceable at very low rates, a point made by Krugman in a column in April 2015, and that the economy was gradually recovering in 2014 with lower unemployment and prospects for growth. The European Commission shows in its May estimate for Greece a growth rate of 2.9% in Greece for 2016.

Grouped Articles

How to Undo the Damage in Greece

New York Times 07/06/2015

Gikas Hardouvelis, Gikas, Hardouvelis

Cutting Greece Loose Might Be a Win-Win

Wall Street Journal 07/08/2015

William A. Galston, William, A., Galston

IMF Warns Eurozone That Greece Needs Far More Debt Relief

Wall Street Journal 07/15/2015

Ian Talley, Ian, Talley

Eurozone unemployment hits lowest level in eight years | Business | DW | 31.07.2017

DW.COM 07/31/2017

Krugman on the debt negotiations between Greece and the EU in April 2015- how the Syriza government Greece wins flexibility for 2015-2016

02/24/2015

Krugman cuts through the fog of media commentary about the Greece negotiations with the EU in April 2015. He says in actual fact the situation is better for Greece than under the previous government, with Greece winning new flexibility for how much it must make in cuts. Under the Samaras government the primary surplus, which is the difference between revenue and expenditures not counting interest on debt, would have to triple from what it is likely to be now. Syriza Tsipras government has won flexibility by keeping language about increases in the future surplus obscure. Krugman points out that it is the primary surplus that matters most, because it is the money Greece has to transfer to creditors. On the revenue side Krugman says collecting taxes needs to be more efficient, and he cannot see how this should be any other way. In the eurozone as a whole the move is away from austerity and towards constructive reforms that promote economic growth. Italy and France also won new flexibility in talks with the EU in addressing the deficit for 2015-2016. As a result the story is positive for the eurozone, yet commentary in the media makes it look like there is the prospect of further decline in the region. As a sign of the recovery auto sales in the eurozone increased by about 9% year over year for the 1st quarter of 2015, with sales increases across the eurozone including Greece and Ireland, and large increases in Spain, Portugal.

Grouped Articles

What Greece Won

New York Times 02/27/2015

Paul Krugman, Paul, Krugman

In Greek Crisis, Rare Moment of Consensus

New York Times 02/24/2015

Jim Yardley, Jim, Yardley

Greece on the Brink

New York Times 04/20/2015

Paul Krugman, Paul, Krugman

Greece Flashes Warning Signals About Its Debt

New York Times 04/19/2015

Landon Thomas Jr., Landon, Thomas, Jr.

Greece’s Long and Painful Odyssey

Wall Street Journal 04/22/2015

Yannis Palaiologos, Yannis, Palaiologos

Greece Says It Is Changing Team That Negotiates With Creditors

New York Times 04/27/2015

Niki Kitsantonis, Niki, Kitsantonis