The economic dustup in Greece is far from over. While an agreement was reached, it looks a lot like earlier agreements – which did little to solve Greece’s problems. Here’s what you should be reading/listening to:
From NPR’s Here & Now show:
This one is key, and why the crisis is far from over:
The way individual countries and the Euro work (or not) together has much to do with the situation. For that there are the following article:
Irwin and Mankiw are on the list of economists/economic columnists you should know.
I do take issue with Mankiw on one point – that the Euro was a political rather than economic decision. I took a course at CU on Europe shortly before the Euro was established; one point the professor made really stuck out to me: If you started with US $100, and went from EU country to EU country, doing nothing but changing your currency into whatever was used in that country, you would have less than $25 left when you got to the final country. Keep in mind that you hadn’t purchased anything at all – just paid currency exchange fees each time you converted to the local currency.
Much of the reason for the Euro was commercial – the ability to cross national borders and do business without currency conversion fees, and the bookkeeping hassles multiple currencies made for. With a single currency, and the ability to move goods and services from place to place with financial ease, the EU could be more competitive with the US economic behemoth. For a long time this was sufficient to outweigh the structural problems built in to the Euro that the Greek crisis exposed – but not any longer. The articles do a decent job of describing the structural problems exposed by the ongoing Greek crisis. Those problems are the reason no immediate solution is likely – just a continuation of the current situation.