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 –

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