Mr. Colm McCarthy:

First, it calls itself a monetary union. One of its declared objectives is the end of financial fragmentation in Europe. That was one of the trumpeted purposes of the EMU, the Economic and Monetary Union. One would need to have an economist’s sense of humour for this but the idea that capital controls are an instrument of economic policy and monetary union is absurd. That is a Heath Robinson monetary union. It is a bizarre idea.

Senator Hayden is correct that the Greek economy did seem to be recovering last year. It looked as if the budget deficit, as conventionally measured, was down to about 3% of GDP. The non-interest deficit was heading down towards zero or even a small primary surplus this year. However, there was a lot of political uncertainty in the last months of the Antonis Samaras government last year. Syriza then won the election. The election of alternative political parties that might be inexperienced and radical is what economists call endogenous. If one squeezes a country for five years with no-hope programmes, then one cannot predict who will win an election. Experienced people, including those in the IMF, take those matters into account and try to avoid programmes that fail for such a long period, precisely because one will get political instability as a consequence.

On the point about the small European countries such as Slovakia and Latvia-----