Populaire berichten

woensdag 25 september 2013

Greece is in dire straits; it will need more debt relief.

- Een column die nu ook duidelijk vermeld dat de Europese belastingbetaler moet gaan bloeden.

http://www.voxeu.org/article/next-greek-package-dangers-ez

This column argues that Greece is suffering because northern EZ countries kicked the can down the road by forcing crisis countries to borrow rather than restructure their debts early on. It is time for the ‘generous’ lenders to face the consequences of their short-sightedness. The bad news that Chancellor Merkel ought to break now to her people is that official debt restructuring is inevitable.

Conclusions

People rightly worry about moral hazard. They oppose any debt restructuring on the ground that it would only encourage Greece and other countries to borrow more, rather than putting their houses in order.
In fact, a debt restructuring would solve a completely different moral-hazard problem – the tendency of the stable countries to ‘kick the can down the road’ by forcing crisis countries to borrow rather than restructure their debts early on, when they are smaller.
Fiscally undisciplined countries have been severely punished over the last few years. The time has come for the 'generous' official lenders to face the consequences of their short-sighted approach. This is the bad news that Chancellor Merkel ought to break now to her people.