Paul Krugman is a critic of fiscal austerity in the face of economic recession. But then he was a big advocate of voting "No" in the Greek referendum. And as a result of the "no" vote winning, Greece is going to be forced into a whole lot of austerity.
Here in China, the stock market closes down 5% almost every day now. (Theoretically, this can go on forever; it's like how a door that repeatedly gets closed 90% of the way will never actually end up closed.) The Redefales (you know, Red Federales) announced that they were going to prop up the market, since that's all they've got going for them right now, and that announcement worked for about half of Monday. The market opened today and immediately dropped 10 percent. At one point today, 89% of stocks on the Shanghai Stock Exchange had trading suspended because they had reached their maximum-allowable drop for the day.
China already has a debt problem that some folks believe makes Greece's problem look like a fart in the windstorm. Chinese external-debt-to-GDP ratio of 282% is much higher than Greece's ratio of 174%. Of course, the Chinese are productive, while the Greeks, uh, not so much. So it's not like China's creditors anytime soon are going to say, "We don't think you're good for it," the way Greece's creditors have. And China has its own currency, a currency that it likes to keep undervalued.
I'm not predicting anything crazy. But then again, no one expects the Spanish Inquisition (or, as I've turned the phrase in my classes, the Industrial Revolution). While my colleagues are making plans to go home for the summer and my family plans to stay here, a tiny part of me has this worry that things might get nuts soon. The Redefales get away with a lot by making people richer. Now that they've stopped making people richer, but they've upped the impositions, this could be a volatile combination.