Top economist criticises Greek handling of bailout showdown

Nobel prize winning economist Paul Krugman, a vocal supporter of Athens in their long-running bailout saga, said Sunday that he "may have overestimated the competence of the Greek government."

The leftist government has agreed to raise taxes, overhaul its ailing pension system and commit to privatisations it had previously opposed in exchange for an international bailout of up to 86 billion euros ($94 billion) over the next three years.

The draconian agreement -- accepted by a party that came to power in January promising to end austerity -- came after over 61 percent of Greeks on July 5 rejected further cuts in a referendum called by Prime Minister Alexis Tsipras.

Krugman suggested that the ruling radical Syriza party staged the showdown without having a Plan B -- "at least something they could hold up, 'this is what we will do if we can't get any new cash.'"

"Amazingly," Krugman said on "CNN's Fareed Zakaria GPS," "they thought they could simply demand better terms without having any backup plan.

"So certainly this is a shock."

The New York Times columnist has insisted repeatedly that five years of crisis in Greece have shown that relentless spending cuts -- the international formula for Greece and other eurozone countries that got bailouts -- do not save an economy in recession, but rather make it sicker.

After the referendum, the Greek government accepted even tougher terms from the troika of Greece's creditors -- the European Commission, European Central Bank and International Monetary Fund.

"So I, you know, I may have overestimated the competence of the Greek government," added Krugman, who had urged Greeks to stand up and vote "no" to tougher austerity in the referendum.