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Wednesday, March 27, 2013

Krugman suggests that Cyprus should exit the EZ

Ignoring of course the "politics", or rather geo-politics, of such a decision.

Getting to the same point by cutting nominal wages would take much longer and inflict much more human and economic damage.

Otherwise, we’re talking about Greek-level austerity or worse in an economy whose fundamentals, thanks to the implosion of offshore banking, are much worse than Greece’s ever were.

And he comes back with a new post dealing with the matter of the debt. He asks, answering the question: Wouldn't an exit make that debt unsupportable, and force default?"

" ...what makes you think that Cyprus can avoid default even if it stays on the euro? " 

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