American economists blame the troika for the crisis in Greece

American economists blame the troika for the crisis in Greece

Athens, July 2, 2015/ Independent Balkan News Agency

By Spiros Sideris

The American economist Jeffrey Sachs, Barry Eichengreen and Paul Krugman blame the troika for the crisis in Greece, while they praise the attitude of the Greek Prime Minister Alexis Tsipras and seek more understanding from Germany.

Three of the most important American economists strongly criticize the policy of Europe, and Germany in particular, on the crisis in Greece.

Saxe, Krugman and Eichengreen appear surprised by the “incompetence” of Brussels and Berlin.

All three economists in their articles published over the weekend lay the main blame for the crisis in Greece to the European Commission, the International Monetary Fund and European Central Bank.

“Anyone concerned with the arithmetic of Greek debt (…) knows that the country will never be able to repay its debts”, Saxe wrote in an article in the British newspaper Guardian.

Mostly the Germans, says Saxe, should show understanding for the situation of the Greeks. Because Greece is currently in a similar economic situation to Germany after the Second World War.

“Thay need to remember the help received by Germany through the Marshall Plan and the impairment of its debt during the London Summit in 1953”, said American economist.

“The reduction of debt played an important role in the economic recovery and the creation of democratic structures in Germany”, he added.

According to Saxe, Greece finds itself in a similar situation today and the troika is the one that must protect the country from political chaos and extreme forces.

The amounts owed by Athens to its creditors “are too large for Greece but too small for Europe”, he says.

Finally, Saxe believes that Europe has two possibilities: “a constructive impairment of the debt” of Greece or the political collapse of the country which will have major repercussions abroad.

Paul Krugman in two articles, one on Saturday and one Sunday, attacked Europe. Europe is responsible for “devastating austerity” in Greece.

Tsipras does “the right thing” by asking the opinion of the Greek people for the austerity program proposed by Europe, Krugman says.

Also, the American economist advised the Greeks to vote “no” in the referendum. “The troika demands to continue the policy of the last five years”, he reports, but so far there has been no success and there is not going to be any in the future.

Krugman also considers that Greece and its banks are in such a bad condition that an exit from the euro would not cause much bigger mess. A Grexit «would pave the way for the country’s economic recovery”.

The troika, with the new package, gave “an ultimatum to Tsipras, which he could not accept”. As such, says the American economist, he had no other way except to turn to the people.

Barry Eichengreen does not blame the Troika entirely for the crisis in Greece, but the most part. The inability “of the Greek Prime Minister is not comparable to that of “the European Commission, ECB and IMF”, he estimates.

All three institutions had stood in 2010 against a reduction of the Greek debt, as they are now, although it would have been “the most obvious retreat” to Athens, Eichengreen says.

The American economist had estimated in 2007 that a split of the euro zone is possible, saying that the cost of a country exiting from the euro would be too large. Now his opinion has changed however: “I had underestimated the scale of political inability, not only of the Greeks but also of their creditors”.