Wednesday, July 15, 2015

The Eurozone Must Change

I don't have time today for a full post, but I just want to reiterate what I said yesterday. Eurozone leaders are patting themselves on the back for having prevented Greece from abandoning the euro. But their "solution" is merely another futile exercise in temporizing, kicking the can further down the road and Greece once again in the gut. The IMF minces no words on the futility of this maneuver, and Eurozone leaders knew this before they forced Greece to sign the agreement:

Dans un rapport publié mardi mais dont les autorités européennes ont eu connaissance le 11 juillet, soit avant que l’accord qui conditionne un nouveau plan d’aide à Athènes ne soit signé, le FMI estime en effet que la dette grecque ne peut être viable qu’« avec des mesures d’allégement ».
Continuing with this denial is madness. It will end badly.


Parisian_in_Sweden said...

Remember that debt relief was acknowledged in Monday's agreement. Sapin this morning clearly said that EZ leaders knew about the report and did not try to deny it. The spokesman of Schauble just said that a 30-year grace period was an option to be discussed (provided the value of the debt claim does not decline significantly, i.e. 30-year grace but higher interest payments after 30 years).

I suspect that Merkel has agreed to terms friendlier towards Greece than we thought but has deliberately fudged them in order get an approval in the Bundestag.

FrédéricLN said...

These ideas of 30-years grace period and the like are precisely equal to keeping junk bonds in the other States assets list. Hiding failure furthermore. Trying to keep the Ponzi house of cards of public debt, standing. Substituting speculation on failing assets, to investment into "l'économie réelle". Economics in times of funny money — what did economists teach us about that? (I don't remember actually).