If the German position is that debt must always be paid in full, no relief in substance even if it manages to avoid debt write-offs on paper, then that position is basically crazy, and all assertions that Germany understands reality are proved wrong. If Germany thinks that the Greeks are demanding too much, well, we’re in a negotiation — hopefully one that does not rely on the threat that the ECB will destroy Greece’s banks if it fails to cave.
The point for now is that Syriza is making sense. The next move is up to the creditors.
When Krugman rallies behind Syriza, it’s time to understand that maybe you’ve been wrong all along and maybe it’s time to change your stubborn ideas.
As Varoufakis puts it very smartly: if a friend who lost his job and can’t pay his mortgage will ask your opinion whether maxing out his credit cards to pay the mortgage for the next few months and then getting other credit cards to live on is a good idea, what will you tell him? When Greece is clearly a matter of insolvency, why does Europe insist to treat it as a matter of illiquidity, prolonging their addiction to the next tranche of credit?
Also, I wonder if the ECB will do again the blackmail with stopping ELA to let the Greek banks fail if the government does not obey to their orders – and how will Syriza react. For now, they seem to have much more cojones than the president of Cyprus. I really hope it’s not just a show.