By Barry Eichengreen, Peter Allen & Gary Evans
in ekathimerini.gr Greece, July 27, 20156
Greece’s debt is unsustainable. The International Monetary Fund has said so, and it’s hard to find anyone who disagrees. The Greek government sees structural reform without debt reduction as politically and economically toxic. The main governing party, SYRIZA, has made debt reduction a central plank of its electoral platform and will find it hard to hold on to power — much less implement painful structural measures — absent this achievement.
Moreover, tax increases and spending cuts by themselves will only deepen the Greek slump. Other measures are needed to attract the investment required to jump-start growth. Reducing the debt and its implicit claim on future incomes is an obvious first step.
Continue reading A better deal for Greece is possible
By Thanasis Delistathis. He is the founder and managing partner of New Atlantic Ventures, an early-stage venture capital firm based in the Washington DC Metropolitan Region and Cambridge, Massachusetts.
His article can be read in The Greek Reporter by clicking on:
Included in this article are OECD’s recommendations on the Greek Crisis, read below:
Dr. Paul Robin Krugman is Professor of Economics and International Affairs at the Woodrow Wilson School of Public and International Affairs at Princeton University. An op-ed
columnist for The New York Times. He won the Nobel Memorial Prize in Economic Sciences for his contributions to New Trade Theory and New Economic Geography.
Many economists, including Janet Yellen, view global economic troubles since 2008 largely as a story about “deleveraging” — a simultaneous attempt by debtors almost everywhere to reduce their liabilities. Why is deleveraging a problem? Because my spending is your income, and your spending is my income, so if everyone slashes spending at the same time, incomes go down around the world.
Or as Ms. Yellen put it in 2009, “Precautions that may be smart for individuals and firms — and indeed essential to return the economy to a normal state — nevertheless magnify the distress of the economy as a whole.”
So how much progress have we made in returning the economy to that “normal state”? None at all. You see, policy makers have been basing their actions on a false view of what debt is all about, and their attempts to reduce the problem have actually made it worse.
First, the facts: Last week, the McKinsey Global Institute issued a report titled “Debt and (Not Much) Deleveraging,” which found, basically, that no nation has reduced its ratio of total debt to G.D.P. Household debt is down in some countries, especially in the United States. But it’s up in others, and even where there has been significant private deleveraging, government debt has risen by more than private debt has fallen.
Continue reading Nobody Understands Debt