Ο Paul Krugman, η Ελλάδα της κρίσης, η Κύπρος του ευρώ και η Αργεντινή του 2001

Σε άρθρο του, πριν τρία χρόνια σχεδόν, ο Paul Krugman αναφερόταν στις δυσκολίες που περίμεναν τη χώρα μας και πόσο η κατάστασή της του θύμιζε την Αργεντινή του 2001. 
Η  Αργεντινή του 2001 τού έρχεται στο μυαλό αναλύοντας την κατάσταση στην οποία βρίσκεται η Κύπρος σήμερα και αναρωτιέται για μια ακόμα φορά για ποιο λόγο παραμένει στην ευρωζώνη.
Παρακάτω παραθέτω και τα δυο άρθρα του, του Μαΐου του 2010 και το σημερινό.

Default, Devaluation, Or What? (4/5/2010)

Is there anything more to say about Greece? Actually, I think so.

Observers like Charles Wyplosz, who point out that the adjustment being demanded of Greece is extraordinary and hard to see happening, are right. And yet ... one thing I haven’t seen pointed out sufficiently is that a debt restructuring, or even a complete cessation of debt service, wouldn’t do all that much to ease the burden.

Consider what Greece would get if it simply stopped paying any interest or principal on its debt. All it would have to do then is run a zero primary deficit — taking in as much in taxes as it spends on things other than interest on its debt. But here’s the thing: Greece is currently running a huge primary deficit — 8.5 percent of GDP in 2009. So even a complete debt default wouldn’t save Greece from the necessity of savage fiscal austerity.

It follows, then, that a debt restructuring wouldn’t help all that much — not unless you believe that getting forgiveness on much of Greece’s existing debt would make it possible to take on substantial new debt, which doesn’t seem very likely.

The point is that the only way to seriously reduce Greek pain would be to find a way to limit the costs of fiscal austerity to the Greek economy. And debt restructuring wouldn’t do that.

Devaluation would, if you could pull it off. I see that Vox has reposted the classic Eichengreen paper on why you can’t. I’ve already written that this argument, which I found extremely persuasive when first made, now seems to me less than

watertight. But let me be a little more specific.

The way things are going, it looks quite possible that Greece will spiral into domestic as well as debt crisis, and be forced to take emergency measures. And that makes me think of Argentina in 2001. At the time, Argentina had the convertibility law, supposedly permanently pegging the peso to the dollar — and that was supposed to be irreversible for the same reasons the euro is supposed to be irreversible now. Namely, to repeal the law would require extensive legislative discussion, and any such discussion would set off destructive bank runs, hence there was no way to undo the fixed exchange rate.

But by late 2001 Argentina was a mess, with many emergency measures in place in an effort to contain the situation. These included the corralito, severe restrictions on bank withdrawals to contain bank runs — and one unintended consequence of all this was that the bank runs argument against suspending convertibility became moot.

Is it really impossible to see something similar happening in Greece? And if it does, might not other countries’ membership in the eurozone be called into question?

This drama is far from over.

What’s the Greek for Corralito? * (28/3/2013)

It’s now three years since I suggested a possible route to Greek exit from the euro: a banking crisis, followed by sharp limits on bank withdrawals similar to Argentina’s 2001 corralito, and then — with the panic argument against exit removed — reintroduction of a domestic currency.

Obviously, that hasn’t happened. Despite intense suffering, the Greek political elite’s commitment to the euro has proved incredibly strong. My analysis of the economics wasn’t wrong, but my political guesstimates were off.

Still, Cyprus is now following the first part of the script. And let me ask again: what, exactly, is the point of remaining on the euro? The convenience and efficiency of a single currency is gone; meanwhile, the future for Cyprus on the euro is one of years of grinding deflation and catastrophic austerity. Is the hope of someday, somehow restoring the status quo ante enough to justify all of this?

* Corralito was the informal name for the economic measures taken in Argentina at the end of 2001 by Minister of Economy Domingo Cavallo in order to stop a bank run, and which were fully in force for one year. The corralito almost completely froze bank accounts and forbade withdrawals from U.S. dollar-denominated accounts.