Delusions in the Eurozone

Morten, thank you for a nice piece. Sometimes past sins (accumulated debt) are too heavy to overcome even after the decades of right economic policy (and during these decades, it will be hard to explain to citizens of Greece the need for austerity => unstable governments => likely to repeat primary deficits).

P.S. Just a small misprint: Figure 2 should have titled “for Latvia”, not “for Greece”.

http://www.toonpool.com/user/2041/files/eu-merkel_478635.jpg

Greek economy shrinks 4.6 percent in second quarter
http://www.reuters.com/article/2013/08/12/us-ce-greece-gdp-idUSBRE97B09B20130812?feedType=RSS&feedName=topNews&utm_source=dlvr.it&utm_medium=twitter&dlvrit=992637

Internal Bundesbank Report Predicts New Greek Bailout In Early 2014, More Headaches For Merkel
http://www.zerohedge.com/news/2013-08-11/internal-bundesbank-report-predicts-new-greek-bailout-early-2014-more-headaches-merk

Dear author, it is technically impossible to add *.doc file as an image to your article.

http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2013/08/Doomed-To-Repeat-History.jpg

http://www.zerohedge.com/news/2013-08-11/bridgewaters-ray-dalio-warns-eurocrisis-not-over

http://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.27.3.167