Latvia is often cited as an example for Greece as it undergoes a brutal internal devaluation while keeping its currency pegged to the euro….. Yes, that’s right: the oh-so-virtuous Baltics have done worse than Iceland. … But their money is sound.
Well Paul, what do you recommend instead? If not unemployment, and social reorganization and price recalculation, then what? Destruction of what little concentrated capital that there is? Enslaving the population with debt in the false hope that these countries will be able to compete well enough on the world stage that they work their way out of it? Rapid redistribution rather than rapid reorganization?
The answer is undoubtably the loss of sovereignty in exchange for security, without acknowledging that people value status and sovereignty as much as they do security. That is, unless your ambition is debt slavery. Which it is, I’m sure: to replace violence and militarism with fraud and slavery. But then, to understand this, one would have to have an ancestry that could hold land, and a culture willing to die for it, as a means of maintaining freedom. Debt-totalitarianism is no different from force-totalitarianism.
Personally I find it simply the difference between the honesty of violence and the fraud of debt enslavement.
This is the underlying problem with all Krugmanism – totalitarianism under the guise of a false economic equality. Watch what future discipline the Baltics develop versus the Greeks. The most important institutions are those of cultural habits: behavioral institutions are paid for by the accumulation of forgone opportunities: ie: discipline.