by Calculated Risk on 2/13/2010 02:59:00 PM

Another view ...

Simon Johnson writes at Baseline Scenario: Greece Derails – Is Europe Far Behind?

Already facing serious difficulties – both internal and with regard to its EU partners (see our longer essay in Saturday’s WSJ) – Greece’s predicament just became substantially worse.

Speaking on national television this evening, the Greek Prime Minister – George Papandreou – lashed out at the European Union (presumably meaning mostly Germany) for creating a “psychology of looming collapse which could be self-fulfilling.” He also implied that Greece was being treated, in some senses, like a “lab animal.”
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Greece is well down the path to becoming regarded more like Argentina – a country that struggles over many decades (and whose leaders frequently rail against the world) and for which episodes of reasonable prosperity and new economic models are punctuated by gut-wrenching crises, most of which do not shake the world.

Will the EU save Greece? Much will depend on how bad the situation could become in other “related” (in the eyes of the financial markets) places.

But destabilizing actions or inflammatory statements by Greece make an orderly rescue less likely and put another major international economic crisis firmly on the table.

Here is the piece in the WSJ from Simon Johnson and Peter Boone: The Greek Tragedy That Changed Europe Update: When I linked to it, the title was "How Much Does a Grecian Urn?"

Greece is just one of several global financial concerns right now ...