90.9 WBUR - Boston's NPR news station
Top Stories:
Here and Now with Robin Young
Public radio's live
midday news program
With sponsorship from
Mathworks - Accelerating the pace of engineering and science
Accelerating the pace
of engineering and science
Tuesday, May 22, 2012

Everything You Wanted To Know About The Euro Crisis

The Euro Crisis is back in the headlines with a new word, “Grexit,” meaning the possibility of Greece leaving the Eurozone.

So what is the Eurozone and what’s been happening there the last three years? Can a crisis really be that urgent after 3 years? What about this austerity debate? — voters in France and Greece just elected governments which reject austerity, so what does austerity look like in Europe and what are the arguments for and against it?

Why has Greece been at the center of the crisis and what would happen if it left the Eurozone? And finally, we know this is about money, so how much, for what, who is paying, and why should they?


  • Richard Parker, economist and professor of public policy at Harvard’s Kennedy school who also served as adviser to the former Greek government

Please follow our community rules when engaging in comment discussion on this site.
  • kymy

    We are moving to France and buying a home there, can we expect the Euro to Dollar exchange to drop back down towards $1.00

  • Quincy

    I have heard that the size of the entire Greek economy is roughly about that of New York City.  How can this be that big a problem for Europe, the US and/or the World?  Even if it goes bankrupt — we have had plenty of nations and cities and counties do that — that does not seem like a major issue to me.  Please explain.  Thanks!

  • http://pulse.yahoo.com/_Y6CO5C2HE4WM2OYGCDVWGPRXXM oldman

    Again we get the debt to GDP ratio argument – isn’t this the actual problem? The idea that you can grow debt indefinitely as long as you have growth indefinitely. You can’t grow indefinitely – eventually growth will go away, like it did in 2008, but the debt does not. And then you end up with a big mess.

    • Call_Me_Missouri

      The problem with what you are suggesting is that you would need to be able to predict when the growth with end which is not possible.

      • http://pulse.yahoo.com/_Y6CO5C2HE4WM2OYGCDVWGPRXXM oldman

         Actually that’s what I’m saying – a model depending on never ending growth is not sustainable.

        • Call_Me_Missouri

          A model trying to predict when to stop spending relies on knowing when growth will end.

          As populations grow, spending must increase in order to provide services to an increasing population. Perhaps a better solution would be to increase spending based on population levels… but that would require yearly censuses being taken.

          • http://pulse.yahoo.com/_Y6CO5C2HE4WM2OYGCDVWGPRXXM oldman

            You can’t have a model like that unless you’re psychic or have a time machine. So we have  unmanageable debt and crashes instead.

          • Call_Me_Missouri

            I disagree.  It was not Government spending that caused the problems in the US and similarly it wasn’t Government spending that caused the problems in Greece.

            It was a large scale non-government economic retraction that lowered the tax base that is causing the Government to have to cut back it’s spending.  If the banks hadn’t screwed up so royally the Governments of many countries would be just fine right now.

  • Rbshaw58

    Haven’t heard anyone hold up Argentina as a model of how to get out of this. For Europe…why not?

    • http://pulse.yahoo.com/_Y6CO5C2HE4WM2OYGCDVWGPRXXM oldman

      Argentina defaulted and went through an awful mess before it started climbing out of it. Are you suggesting the same for Greece and other European countries?

      • DetroitDan

        Hey.  Argentina went through the awful mess before default.  Default and depegging Peso to U.S. dollar solved problem.  Same basic solution will work for Greece.  This is vastly simplified of course, but the basics are solid…

  • Bentsn

    Parker said that US social security tax is about 6%. No, you must count the employer portion as well. It is about 13%!

    What does this say about the credibility of Parker’s other remarks?

  • Call_Me_Missouri

    How can you grow an economy with contractionary monetary policies?

    • DetroitDan

      Monetary policy is irrelevant at this point (and generally overrated).  Fiscal policy can be far more effective…

      • Call_Me_Missouri

        You are right, I misspoke.  I was pretty upset last week listening to Paul Krugman bashing Ben Bernake about not doing enough when I couldn’t help but think that he had really done almost as much as he could do and the real irritation should be with Congress.

  • ToyYoda

    No evidence of inflation by looking at interest rates… what?  Is that the only way?  Isn’t food prices up?  Isn’t gas prices up?  Isn’t the cost of education up?  “No evidence” of inflation seems suspect.

    • DetroitDan

      With unemployment over 20%, a little unavoidable (food & gas) inflation is irrelevant to the policy issues he’s discussing…

  • svolantetb

    In the late 1990s, America’s fiscal position was improving, with budget surpluses forecast for years and a rare opportunity to reduce the national debt significantly.  By the end of President Bush’s first term, Washington had thrown away the surpluses, turning them into deficits, and squandered the chance to shrink the debt. It is extremely frustrating that so many members of Congress and pundits who favored fiscal irresponsibility a decade ago are among the loudest voices calling for austerity now.  When I hear these arguments, I’m always reminded of a line from the film “Cold Mountain:” “They made the weather! And now they go outside, stand in the rain, and say, ‘**it! It’s rainin’!’”

  • Curiousity in NH

    Can the ECB manipulate its balance sheet to make loans to Greece link the US Federal Reserve Bank?

  • Jim

    Isn’t Keynesian economics an utter failure that has resulted the in the mess we have now?  That is “dumb” economic interference by governments that generate artificial bubbles…the housing crisis being a prime examples.  Why not allow the core of business generation (small business) to expand according to true demand–without the onnerous burden of high taxation and excessive regulations (that would push them outside the US).

    • DetroitDan

      No, you’ve got this 180 degrees backwards.  

      • Jim

        Please explain how allowing natural market conditions to flourish results in artificial bubbles and dramatic market recalculations.  Further, please explain how generating favorable conditions for business (small and large) pushes business overseas…or “180 degrees backwards” as you assert.  Lastly, small business accounts for 99.7 of all employers, half the employment in the US and have generated 65% of all new jobs in the past 17 years–please explain how supporting their growth inhibits economic prosperity in this country.  

        • DetroitDan

          Nothing against small business.  Keynes advocated fiscal deficits to stimulate demand which is the lifeblood of small business…

      • Jim

        DD–sorry, I re-read this and realized that you had to joking.  Sometimes txt doesn’t translate online. 

    • Nixl

      No, its what got us out of every other crisis we faced since the depression. 

  • DetroitDan

    I agree with Parker, except for the about “borrowing” being the solution.  Sovereign currency issuance (fiscal deficit) is the solution, and should not require borrowing.  This should be Econ 101, but isn’t…

  • Tim

    What did Mr. Parker mean when he said that Massachusetts subsidizes the entire Southern United States?  

    • Nixl

      Exactly that. Rich states pay for the misbehaving poor ones. Its nothing new, it happens every year and if you listened to the news you would hear how this state of that state gets so many $ for each of theirs from the gvmt. Where do you think that comes from? the rich states who pay in and get less back! 

  • Markus

    So, first the professor blames Greece’s problems on America (credit default swaps and the like), with no blame at all for Greek overspending. Then when asked twice about how Greece mistated their dept ratio as the EU was forming, he dodged it. And, of course, no mention that after trillions of stimulus dollars (a strongly Keynesian move), unemployment is still in the 8′s. Note, I think there are a lot of other forces at work, but at least mention that the value of poring trillions into the economy has some questions.

    My summary: He sounds like another advocate, not someone with either the smarts or decency to be objective. Might be rose colored glasses, but I think I remember a time when professors could be trusted to give both sides.  

    • http://pulse.yahoo.com/_LJPH6Y7AINNGL7Y6ANGSB4SLPA YuckDaFankees

      I wonder with the Greek government paying his salary at one time if perhaps he had/has a vested interest or at least is not completely impartial about the Greek government.  Sure sounds like it.  Not to mention he is a total Keynesian ideolog which together makes for one of the worse economist talking heads I have ever heard on NPR. Even as liberal all I can say is Fail.

Robin and Jeremy

Robin Young and Jeremy Hobson host Here & Now, a live two-hour production of NPR and WBUR Boston.

September 1 4 Comments

Breastfeeding Gets A Boost From Philadelphia Hospitals

The city's major birthing hospitals have stopped sending new moms home with baby formula, to encourage breastfeeding.

August 29 Comment

World Championship Tug-Of-War Is ‘A Thing Of Beauty’

This weekend's competition in Wisconsin is a bit more intense than it was in your grade school gym class.

August 29 Comment

Repelling Mosquitoes With A Natural Sticky Patch

The Kite Patch releases odors that block the bug's carbon dioxide receptors, sending them in another direction.

August 28 3 Comments

Catching Up With The Polyphonic Spree

The choral rock band out of Dallas, Texas, has been thrilling audiences with its live performances for over a decade.