The magazine In These Times ran this guest column by Rep. Alan Grayson, FL-09:
William Hague, the U.K. Conservative opposition leader and Foreign Secretary, once referred to the euro, the European Union currency, as a “burning house with no exit.”
That sounds about right.
If Greece leaves the euro, it will suffer the tortures of the damned. And if Greece stays in the euro, it will suffer the tortures of the damned.
Listen, I love Greek tragedy as much as the next theatre-goer. Especially Sophocles. But this is ridiculous.
Consider how we came to this point. Virtually all of the world’s economies got whacked, very, very hard, by the Crash of ’08. Essentially, “aggregate demand,” the total demand for goods and services, collapsed, because much of that demand had been sustained by borrowing against wealth (think, “home equity loans,” “margin loans,” etc.), and then wealth collapsed. When aggregate demand drops, there are only four ways out of that hole:
(1) Borrow and spend (aka fiscal policy).
(2) Print and spend (aka monetary policy).
(3) Put everything on sale (aka trade policy).
(4) Say goodbye (aka emigration).
That’s it. There are no other solutions to that problem.
So let’s look at what happened to Greece after the Crash of ’08, when aggregate demand collapsed.
