Here's a summary of this counter-MMT position on resolving the financial crisis in the EZ:
...Obviously there will never be a “good time” to purge the debt from the system, however, doing this at the top of a credit boom might actually not be a bad moment as it provides countries and households with a situation were they have more freedom to adjust to changes in the economy. For instance they can move closer to where there is work (because they can actually sell their house without being stuck with a huge amount of negative equity) or re-educate (because they are not burdened with student loans that prevent them from taking on new education), which should provide stimulus on its own to avoid a deflationary spiral. A study by the McKinsey Global Institute (Debt and deleveraging (2010)) shows that deleveraging through default is tough in the beginning, but that growth will quickly pick up at an increased rate and the subsequent 10 year GDP growth is the highest compared to all other solutions (and it will also yield the largest increase in GDP 15 years later, compared to when the deleveraging began). Worries about a deflationary spiral are mostly based on memories of the Great Depression, but the evidence of other default episodes shows that the outcome of the 1930’s is not the de facto result....
What is needed, in combination with the debt relief we talked earlier about, are structural reforms. The austerity or structural reforms should have the goal of preventing that countries will in the future end up in the same situation as they are now, but should not try to solve the current debt problem. Strong changes to entitlement programs are needed, as well as health care and housing overhauls, but these structural changes should be gradually implemented alongside a long term plan to reform. This gives society time to adjust, employees to re-school, homeowners and house prices to adjust and families time to switch to a more debit financed system of health care and education instead of one based on credit and student loans....
A technocratic government could be very well suited to implement these structural reforms. However, technocratic can have different meanings, from the one-party China model to the technocratic-military hybrid-model in Egypt where strong military power is coupled with civilian expertise with respect to social and economic issues (The Economist, 19/11/11). These models are far from desirable in Europe of course, citizens simply would not accept them. Technocratic governments could however be successful for short periods of time and the situation as described in the previous section might be one: technocratic governments might be the tool to overcome the difficulties of implementing structural reforms and give countries a good fresh-start and long-term vision for the coming decade. This would be a very noble cause for any technocratic government, but as ever things are not so simple, since even technocratic governments have an "agenda".
The current governments in place in Italy and Greece are puppets of the banking system, making sure that countries do not default and pay as much interest for as long as possible by implementing short term austerity measures. This is not the type of technocratic government these countries need. They need a technocratic government that sees that the current debt burden is unsustainable and cannot be serviced, acknowledging that defaults are necessary. They should seize this opportunity to change the financial system and implement structural reforms, while exercising their powers to facilitate orderly defaults for both governments and household debt. This way countries will be able to start from a situation where there is breathing room to implement much needed structural reforms throughout society.
Read the full post al Zero Hedge
Europe Needs Debt Relief And Structural Reforms, Not Hyperinflation
by Philip Stive and Dennis Buitendijk
MMT would agree that there needs to be debt restructuring but it would disagree about the rest of the proposal involving austerity and so-called "temporary" technocracy.