According to the secret IMF report released to the European leaders prior to the Sunday-Monday summits, "The dramatic deterioration in debt sustainability points to the need for debt relief on a scale that would need to go well beyond what has been under consideration to date - and what has been proposed by the ESM."…
IMF's role in the Greek bailout 3.0 will go down in history as a direct participation in the wilful re-writing of the European system of governance to embrace politicised leadership over calm and effective economic policy structuring. As per Eurogroup, there is no longer any doubt that the euro area leadership is wilfully incapable of resolving the Greek crisis.
Incompetence no longer counts - the euro area finance ministers and prime ministers had all necessary information to arrive at the only logical conclusion: debt writedowns are needed and are needed upfront.
They opted to ignore these so politics can prevail over economics and finance, allowing for subsequent consolidation of the euro area systems and institutions without a clear path for any member state to deviate from such.
Greece is just the first roadkill on this path.true economics
14/7/15: The Brave New World of IMF Debt Sustainability Analysis
Constantin Gurdgiev | chairman of the Ireland-Russia Business Association, contributor and former editor of Business & Finance Magazine, and lecturer in Finance with Trinity College, Dublin
1 comment:
The EuroZone rules require that any debt writedowns have to be paid for by taxpayers of other EU countries (not just EZ) That is why debt writedowns are political non starters.
But it doesn't have to be that way, and the rules have to be re-written.
That said, even those who talk about debt writedowns, still believe that "austerity" will lead to an economic recovery. Very problematic view.
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