American Economist Krugman: Europe Needs to Stop the Clock in the Greek Case

Acclaimed American economist and Professor of Economics and International Affairs at Princeton University Paul Krugman stressed in an article with the New York Times that what Europe currently should do while dealing with the Greek crisis is to “stop the clock” for a short period of time in order to avoid mistakes that could lead to a preventable disaster.

“Why do we need a time-out? Mainly because the new Greek government simply hasn’t had time to do its homework. This is not a criticism: It’s a new government, it’s outside the existing political establishment (because voters feel, with justification, that the establishment has failed), and SYRIZA doesn’t have a deep technocratic bench. Even with the best will in the world -and from what I hear, we are talking about well-intentioned people here- the Greeks can’t present a detailed proposal, decide exactly what they must do and can’t do, just yet,” Krugman estimated.

As he highlighted, if this was a different phase of history, the newly elected leftist-led Greek government could be able to turn for assistance to technocratic institutions outside the ones they currently rely on: “The Commission is, in their eyes and pretty much in reality, a bad actor that has had terrible judgment. The IMF are pretty good guys these days but are part of the Troika and certainly can’t be directly involved in drafting this government’s agenda. Ditto the ECB.”

According to the American economist, in a period of 60 or 90 days, an inability to reach a deal would become clear and therefore a Grexit would emerge as the only solution, although this remains unclear for the time being. “What we do know is that what appears to be the demand of hardliners -that the new Greek government agrees in the next few days to abandon everything it campaigned on, that it locks in draconian fiscal targets, privatization, and other things it hasn’t had time to assess- is impossible. I don’t know whether the hardliners believe that this bum’s rush will work, or are just pushing Greece out the door. But this is not how it should go. Everyone needs some time to think,” Krugman concluded.