Photo: Bloomberg TV
In a Project Syndicate editorial published, PIMCO CEO Mohamed El-Erian parsed who is to blame for the mess in Greece and the eurozone.He identified four main culprits: the two main political parties in Greece (PASOK and New Democracy), who borrowed money they were never going to be able to pay back; creditors who were more than willing to lend it to them in an irresponsible manner; the eurozone as a whole, which failed to enforce checks built in to the common currency system; and the IMF, which due to political pressure likewise failed to do its duty in ensuring financial stability.
Here is El-Erian:
None of the four can avoid the reality that Greece’s collapse would not have occurred had they not been complacent during the boom and, subsequently, fulfilled their responsibilities during the bust so poorly. They sucked each other into a sense of false prosperity, only to trip each other up during the inevitable downturn. Now, one hopes, all four will be held properly accountable by their stakeholders and undertake serious self-evaluation.
Most likely, they will end up getting off too easy, especially compared to the real victims of this historic tragedy – the most vulnerable segments of the Greek population, who will become much worse off, today and for many years to come, as jobs disappear, savings evaporate, and livelihoods are destroyed. And they may not be alone. Millions of others may experience collateral damage, as financial contagion risks spreading to other European countries and to the global economy as a whole.
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