As far as I can see, Costas Lapavitsas has quite a sound grasp of the theory of money and banking. That is not really his problem. The issues are rather:
1) Abstraction - how do the abstract economic models actually relate to concrete empirical realities? 2) Narrative - if you know what is happening, what sort of story should you be telling, to whom, and why? 3) Morality and politics - how should we understand the politics and morals of finance? Lapavitsas does have answers to all these questions, but in places they are more implicit than explicitly argued for, or, they are formulated in a rather question-begging way. "Opting out of the euro" would just create a much bigger black market in currencies, but that aside, the very idea that what specific currency you use is of "fundamental" importance for economic wellbeing - other things being equal - is mistaken (I leave out of account here the totally debased currencies such as the Zimbabwe dollar). It is true, of course, that speculators can often benefit from the use of "hard" euro currency, or that currency exchange rates make a difference to foreign transactions. But the same sorts of economic problems were bound to occur, no matter what currency was used. Interestingly, Ecuador, a country with a fairly leftwing government policy, uses USD as its currency. It would be ridiculous to blame the problems of Greece on the euro, even although euro backing was certainly congenial to corporate speculators. Economic life in Greece was thoroughly seedy, rotten and corrupt already, and the financial crisis merely brought out into the open a whole lot of problems that were already there before the crisis. But it is true that the EU and the IMF took a sledgehammer approach to the Greek crisis - it made everything much worse than it could have been. Specifically, the attempt is made to use credit provision as a blunt instrument to force through social and political change - to change economic behavior, by means of credit policies. It never really works (because it is not a substitute for a politics which genuinely unites the people for common goals) and then it takes countries a lot longer to recover from the "financial therapy". J.
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