Expecting the Greeks to tighten their belts again is unrealistic. One should not push people beyond the limit of their endurance. Such pressure is stupidity, not policy. The people of a great nation will not starve to pay an exorbitant debt to foreign creditors forever. Indeed, much of this debt results not from the fact that Greeks were living beyond their means, but from the speculatively high interest rates imposed on refinancing credits. So the plan to reduce Greek debt from its current 160 per cent of GDP to 120 per cent by 2020 is yet another fiction. Even if it did happen (and it won’t), such a financial burden would remain unmanageable.
It is true that Greek macroeconomic policy prior to the crisis was unaccountable – and that the Greek people must pay for it dearly. They already are. But is also true that foreign bankers did not show much intelligence and responsibility when they were lending to Greece. They too must pay for it dearly. So far they are not. It is also true that western leaders – especially Angela Merkel and Nicolas Sarkozy – have made a series of mistakes by postponing the decision to write down non-performing Greek debt and by trying to protect the interests of private investors. As for the debt reduction, it has been too little, too late. So some politicians and policymakers must also pay for their mistakes, and the forthcoming elections in France and Germany may prove to be a good occasion.
via www.ft.com
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