Friday, May 7, 2010

Good Paul, why not think a little bit deeper?

Paul Krugman again shows that he is brilliant at rhetoric but deficient in analytics. He writes:
".. What remains seems unthinkable: Greece leaving the euro. But when you’ve ruled out everything else, that’s what’s left. If it happens, it will play something like Argentina in 2001, which had a supposedly permanent, unbreakable peg to the dollar. Ending that peg was considered unthinkable for the same reasons leaving the euro seems impossible: even suggesting the possibility would risk crippling bank runs. But the bank runs happened anyway, and the Argentine government imposed emergency restrictions on withdrawals. This left the door open for devaluation, and Argentina eventually walked through that door..."
Full text
Comment: Now just see what happened to Argentina after they cut the peg: Indeed, Argentina, as Krugman rhetorically says, "walked through the door", yes, but where to? Surely Argentina did not walk through the door towards prosperity. On the contrary. So why does Krugman insinuate nonsense and almost proudly show his ignorance? I do not know. All I know is that Krugman knows little about Europe, he knows little about Latin America and he knows little about economics except of a tiny bit, all the rest with him is much more rhetorical than analytical.

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