Acclaimed American economist, professor of Economics and International Affairs at Princeton University and op-ed columnist for The New York Times Paul Krugman talked to journalist and author Fareed Zakaria about the current Greek financial crisis’ developments.
During his interview at CNN’s “Fareed Zakaria GPS,” the 2008 Nobel Prize winner shared his recent surprise regarding the Greek government’s strategy, saying: “It didn’t even occur to me that they would be prepared to make a stand without having done any contingency planning …amazingly – they thought they could simply demand better terms without having any backup plan. So certainly this is a shock.”
And he continued talking about the terms of the new bailout deal Greece secured: “The new terms are even worse, but the terms they were being offered before were still not going to work. So I, you know, I may have overestimated the competence of the Greek government.”
Paul Krugman also underlined the serious implications a Grexit would have for the future of the European project. Because according to him, a potential Greek recovery may function as an encouragement for other political movements to challenge the Euro as well.
When The New York Times columnist was asked his opinion on whether the Greek financial crisis is finally over, he replied: “No. I mean, really 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.”
Krugman also said that Puerto Rico, although being also tantalized by financial crisis, should not be compared to Greece because of a basic difference: “Puerto Rico is depressed, but it’s not depressed the way Greece is depressed. … if you want to have a common currency, you want to have a common fiscal system as well, which, of course, is what Europe lacks.”
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