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US Economist Paul Krugman: "Forget About Greece, It's a Lost Cause"

Nobel Prize-winning Princeton economics professor, New York Times columnist, and US economist Paul Krugman says, “Forget about Greece, which is pretty much a lost cause; Spain is where the fate of Europe will be decided.”
Referring to the example of the Austrian economic crisis back in 1931, he explains that “Spain has troubled banks that desperately need more capital, but the Spanish government now, like Austria’s government then, faces questions about its own solvency.”
In his New York Times column he tries to answer the question, “So what should European leaders — who have an overwhelming interest in containing the Spanish crisis — do?” Using his economic knowledge he gives a trustworthy solution: “It seems obvious that European creditor nations need, one way or another, to assume some of the financial risks facing Spanish banks. No, Germany won’t like it — but with the very survival of the euro at stake, a bit of financial risk should be a small consideration.”
Explaining that Europe’s policy to lend money to Spanish banks and impose austerity to the country was a mistake, he gives the impression that Europe will be led to a 1931-kind of outcome. Paul Krugman sees Greece as a “lost cause” and finds the “bank rescue” as a major failure.

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