Greece debt crisis: Economist Paul Krugman admits he 'overestimated the competence of the Greek government'

Krugman said that it didn’t even occur to him that Greece wouldn't have a plan for an exit from the euro

Paul Krugman, a Nobel Prize winning economist, issued his verdict on the way the Greek government handled the eurozone crisis and found he may have "overestimated the competence of the Greek government."

In an interview with CNN, Krugman said that it didn’t even occur to him that Greece would make a stand against its European lenders without having made a plan for an exit from the euro if things went wrong.

"Amazingly, they thought they could simply demand better terms without having any backup plan. So certainly this is a shock," Krugman told Fareed Zakaria on his CNN show, Fareed Zakaria GPS.

"I mean, the new terms are even worse, but the terms they were being offered before were still not going to work. So I, you know, I may have overestimated the competence of the Greek government," Krugman said.

Greece is waiting for a third bailout of up to €86 billion after the Greek government hastily ushered in reforms including a VAT rise, a cut in the pension age and the privatisation of assets, dictated by its European lenders in Brussels.

The reforms passed, despite the results of a referendum just a week earlier in which 61 per cent of the Greek people rejected further austerity.

Krugman had urged the Greek people to vote ‘no’ in the referendum. He has been an outspoken opponent of the single currency in Europe. “Greece should vote “no,” and the Greek government should be ready, if necessary, to leave the euro,” he wrote in the New York Times in June. His most recent comments come in light of the Greek government’s lack of preparedness.