Lună: februarie 2015

Free Lunch: Four misperceptions about Greece –

Finally, a misperception of a misperception, so to speak: the notion that austerity has failed in Greece. The German group of „economic sages” who advise the government have rebutted this „Anglo-Saxon” accusation. But their rebuttal fails, for reasons Simon Wren-Lewis convincingly sets out. In particular, the Germans’ point that Athens had no alternative to reducing its 15%-of-GDP deficit when private financing dried up in 2010 does not mean the pace of reduction was not counterproductive in terms of debt sustainability – it turned an unavoidable recession into an avoidable collapse – nor that it was right to pay back outstanding debt in full instead of writing it down at the start. Anglo-Saxons and Greek leftists stand together on the right side of this one.

via Free Lunch: Four misperceptions about Greece –

Greece Should Not Give In to Germany’s Bullying | Foreign Policy

More immediately, Greece can save itself. Left in the clutches of its EU creditors, it is not destined for the sunlit uplands of recovery, but for the enduring misery of debt bondage. So the four-point plan put forward by its dashing new finance minister, Yanis Varoufakis, is eminently sensible. This involves running a smaller primary surplus — that is a budget surplus, excluding interest payments — of 1.5 percent of GDP a year, instead of 3 percent this year and 4.5 percent thereafter. Some of the spare funds would be used to alleviate Greece’s humanitarian emergency. The crushing debts of more than 175 percent of GDP would be relieved by swapping the loans from eurozone governments for less burdensome obligations with payments tied to Greece’s GDP growth. Last but not least, Syriza wants to genuinely reform the economy, with the help of the Organization for Economic Cooperation and Development (OECD), notably by tackling the corrupt, clientelist political system, cracking down on tax evasion, and breaking the power of the oligarchs who have a stranglehold over the Greek economy.

Had the Varoufakis plan been put forward by an investment banker, it would have been perceived as perfectly reasonable. Yet in the parallel universe inhabited by Germany’s Finance Minister Wolfgang Schäuble, such demands are seen as “irresponsible”: Greece must be bled dry to service its foreign creditors in the name of European solidarity.

Greece Should Not Give In to Germany’s Bullying | Foreign Policy.

Greece Is Making an Offer Germany Can’t Refuse – WSJ

Germany and other creditors can, of course, stick to their demand for the current bailout terms or bust, literally. But Greek GDP has fallen by about as much since 2009 as German output fell during World War I. That is not solely the fault of Greece’s corrupt political class or its broken-down public administration. An insistence on more fiscal tightening is economic madness, with potentially disastrous political consequences, in Greece and beyond. Conversely, fiscal breathing room will create an environment more conducive to the kind of reforms Greece so badly needs.

Syriza is a poor standard-bearer for these reforms. But the new government has shown a willingness—from which it must not stray—to suspend or delay the more controversial parts of its agenda. Its only immediate demand is for the fiscal bonds to be loosened, after six years of recession and five of the most unremitting austerity.

The IMF has admitted to a slew of errors in designing the Greek program. The Germans and their allies should do the same, overlooking the tone of many Greek officials’ pronouncements and instead pushing hard on the substance to make sure Syriza doesn’t backslide. Messrs. Tsipras and Varoufakis have as good as admitted that their electoral program isn’t realistic and have offered concessions. Now it’s Germany’s turn.

via Yannis Palaiologos: Greece Is Making an Offer Germany Can’t Refuse – WSJ.