Hope vs. Depression: Argentina Shows Greece There May Be Life After Default
by
Joseph Stiglitz, Martin Guzman
When, five years ago, Greece's crisis began, Europe extended a helping hand. But it was far different from the kind of help that one would have wanted, far different from what one might have expected if there was even a bit of humanity, of European solidarity.
The initial proposals had Germany and other "rescuers" actually making a profit out of Greece's distress, charging a far, far higher interest rate than their cost of capital. Worse, they imposed conditions on Greece -- changes in its macro- and micro-policies -- that would have to be made in return for the money.
Such conditionality was a standard part of the lending practices of the IMF and the World Bank. Typically, when they imposed these conditions, they had little knowledge of the real workings of the economy; and frequently, there was more than a little politics in the demands. There was sometimes an element of neo-colonialism: the old White Europeans once again telling their former colonies what to do. More often than not, the policies didn't work as they were supposed to. There were huge discrepancies between what the Western experts expected and what actually happened.
Pots and pans were familiar props in street protests during economic protests in Argentina in 2002. (Photo: Getty Images)
