Paul Krugman's warnings about the after-effects of austerity only deepened today.
In a visit to Greece this weekend -- where the economy has been crippled by discredited austerity policies which only made matters worse -- Krugman saw a social safety net in tatters and a health care system in crisis.
A new left-wing government is eager to chart a new course, while also keeping Greece on the euro -- and Krugman says a compromise could be reached that's good for everyone, if the banks and other European creditors are willing to take the responsible path.
But right now that deal doesn’t seem to be coming together. Maybe it’s true, as the creditors say, that the new Greek government is hard to deal with. But what do you expect when parties that have no previous experience in governing take over from a discredited establishment? More important, the creditors are demanding things — big cuts in pensions and public employment — that a newly elected government of the left simply can’t agree to, as opposed to reforms like an improvement in tax enforcement that it can. And the Greeks, as I suggested, are all too ready to see these demands as part of an effort either to bring down their government or to make their country into an example of what will happen to other debtor countries if they balk at harsh austerity.