"The European project — a project I have always praised and supported — has just been dealt a terrible, perhaps fatal blow. And whatever you think of Syriza, or Greece, it wasn’t the Greeks who did it."
Ignoring the second part of that paragraph, Krugman must be truly and deeply delusional if he thinks his commentary constitutes constant "praise" and "support" of the European project. He has relentlessly criticized it and predicted its failure over and over and over again. I'm betting the fundamental dishonesty is with himself, but this just makes him completely unreadable.
I think there are a lot of people overplaying what happened today. I'm still trying to figure out precisely which public assets are going to go into that fund, but it looks from here like the goal of the fund is to make it a lot harder for the government to loot large chunks of the economy (including the banks) to make operating payments. In order for this agreement to take effect, Greece has to take the first many steps (VAT tax, pension changes, etc.) and they have to do them soon, before this goes in front of any other country's parliament (I'm looking at you, Bundestag). I would argue it is a very open question whether those steps will be taken. This particular phase of negotiations is definitely not the last one, and I would argue it has all the characteristics of a showy display of force by creditors, which is precisely what has Krugman so enraged. What Krugman seems not to understand is that since Syriza came to power, the Greeks have been engaging in a showy display of resistance. I would argue that the other members of the Union have finally figured out that the kind of conversation that Greece want to have is not a pragmatic, quiet, sober conversation, but a big, loud, emotional conversation.
And an adaptable, compassionate conversational partner tries to adjust to what the other person is used to.
Since we're not actually involved, our best choice at this point is to say:
(1) No Grexit (yet). (Told You So.)
(2) Real Deadlines on Enacting Administrative and Governance Reforms that are widely regarded as necessary in any developed nation.
(3) The beginnings of the kind of oversight that any receiver wants in a BK situation, which, come on people THAT IS WHAT THIS IS. I know it's nice to think of BK as, oh, now I don't owe any more money! Yay! But what it really is, is, Oh, God, Someone Is Going to Haul Off Everything I Have Of Value, Leave Me Enough to Live On, and Then Grudgingly Agree to Leave Me Alone Thereafter, other than telling everyone else so no one else is willing to trust me for a period of time often on the order of 7 years.
It isn't nice to think of Greece as a client dependent on the generosity of the rest of the Union, any more than it is nice to think of some parts of our country in a similar way.
There are a couple tables in this that are not up to date, and rank differently depending on whether you are looking at them from the perspective of total dollars difference in money in vs. money out or the ratio thereof:
But this gives a pretty clear sense that there _are_ states in our union which are quite dependent upon the union as a whole for their continued existence/solvency/banking system/balanced budget.
This kind of transfer payment system is _precisely_ what is missing in the European Union (and used to be missing in ours, as well!). The question _really_ is: how long is it going to take the EU to learn what we learned so very slowly? My guess is, not actually very long compared to us, but probably a few more years, possibly a decade or so.
And it may well be learned on the backs of Greeks.