by Paul Krugman – New York Times Blog
FEBRUARY 20, 2015 4:12 PM February 20, 2015 published at New York Times
OK, we have an agreement re Greece, according to which … what?
We do have four months of funding, plus what looks like an agreement not to hold Greece to fiscal targets for right now in the face of probably fiscal deterioration. The question is what strings were attached.
Greece seemingly gave a lot of ground on the language: the stuff about fiscal adjustment in line with the November 2012 Eurogroup is back in, which Germany will presumably claim represents a commitment to stay with the 4.5 percent primary surplus target. But Greece apparently is claiming that the agreement offers new flexibility, which means that it will assert that it has agreed to no such thing.
So we’re in a weird place: this looks like a defeat for Greece, but since nothing substantive was resolved, it’s only a defeat if the Greeks accept it as one; which means that nothing at all is clearly resolved. And that’s arguably a good outcome — time for Greece to get its act together.
I do find myself remembering an old joke, which slightly modified works for this situation: what do you get if you cross a godfather with a group of finance ministers? Someone who makes you an offer you can’t understand.